Quick Read
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Kraft Heinz (KHC) pays out roughly 52% of free cash flow versus General Mills (GIS) at 81%, with GIS net leverage sitting above its 3x target.
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Campbell's (CPB) slashed its quarterly dividend from $0.39 to $0.25, its first cut since 2001, prompting income investors to vet every high-yield food stock.
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Campbell's( NASDAQ:CPB ) just cut its quarterly dividend from $0.39 to $0.25, so income investors are now checking the rest of the grocery sector. Kraft Heinz( NASDAQ:KHC ) and General Mills( NYSE:GIS ) both reported recently. Their yields of 6.45% and 7.1% look attractive, but neither payout is growing. Which one is safer?
Kraft Heinz Pays Down Debt as General Mills Squeezes Costs
Kraft Heinz beat estimates in Q2 2026, posting adjusted EPS of $0.56 against $0.53 expected, and raised its guidance. Coffee and ready-to-drink pricing added 1.3 points. Weak meats and spoonables cut volume/mix by 2.6 points, so a few brands are still losing shoppers. Emerging markets grew 10.4%, a real bright spot. Management repaid $1.9 billion in debt during the quarter and another $1 billion after the quarter closed.
General Mills earned $0.75 per share on an adjusted basis, exceeding the $0.72 estimate, but organic sales were essentially flat. Cheerios Protein and Love Made Fresh are selling well, while Wilderness dry dog food keeps losing ground. Adjusted gross margin slid to 33.3% on input costs, which hurts a business already competing on price.
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| Dividend Lens |
Kraft Heinz |
General Mills |
|---|---|---|
| Quarterly Dividend |
$0.40 |
$0.61 |
| Prior Level |
$0.625 (before 2019 cut) |
$0.60 (before 2025 raise) |
| Dividends vs. Latest Annual FCF |
About 52% |
About 81% |
| Payout vs. Adjusted EPS Guidance Midpoint |
About 78% |
About 79% |
One Payout Has a Cushion. One Is Running Thin.
Kraft Heinz has kept its dividend flat since the 2019 cut. In FY2025, it generated $3.66 billion in free cash flow, about twice what the dividend needed, and it guides to roughly 110% free cash flow conversion this year. Management says it is adding $100 million in brand spending "from a position of strength."
General Mills has held flat since mid-2025 and extended a 127th consecutive year of payments. Cash is tighter. FY26 free cash flow fell 29% to $1.63 billion. In fiscal Q1, operating cash flow was $297.8 million, below the $330.5 million paid to shareholders. Net leverage sits just above 4x EBITDA against a 3x target, so years of repair lie ahead.
Kraft Heinz's Next Report Will Test the Turnaround
Kraft Heinz reports again soon. Whether consumption keeps improving from about minus 1% in July is worth watching, since a 100bps SNAP drag still weighs on demand. At General Mills, track inflation, which management expects near 6% in fiscal Q4, against adjusted operating profit, guided down 8% to 13%.
Why I Pick Kraft Heinz for Dividend Safety
I respect the General Mills run, and its $750 million savings target could rebuild its buffer. Still, Kraft Heinz is my winner. It already took a painful cut, is reducing debt, and its cash flow comfortably covers the dividend. My one-line reason: Kraft Heinz pays out about 52% of free cash flow, while General Mills pays out about 81% with leverage above target. After Campbell's surprise, the same warning signs we flagged in a free guide to dividend traps are worth running against every high-yield name in the sector.
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