Kellogg Company - K

Weeks summary

Stock picked: Kellogg Company

Ticker: K

Dividend yield: 3.48%

Payout ratio: 72.15%


This weeks stock

What does Kellogg's (K) do?

Kellogg's as a company along side its subsidiaries manufactures and markets ready to eat cereals and convenience foods.

The company operates in four segments, North America, Europe, Latin America and Asia Middle East Africa. They produce many products such as crackers, cereal, cereal bars, crisps, savoury snacks, noodles, veggie foods and more.

You will recognise some of their brands such as Coco Pops, Pop-Tarts, Nutri-Grain, Special K, Pringles and many other brands. Kelloggs sells their products to retailers through direct sales as well as brokers and distributors

Kellogg’s products are manufactured and marketed in over 180 countries and their largest factory is in Trafford park in Greater Manchester, UK. This is also the location of its UK headquarters.

Kellogg’s holds a Royal warrant from Queen Elizabeth II and the Prince of Wales. [1]


Dividend Yield: 3.48%

Payout ratio: 72.15%

Profit margin: 8.09%

Return on assets: 5.79%

Return on equity: 33.36%

P/E ratio (price to earnings): 20.89

Adjusted EPS: 3.16

EPS (Earning per share) Growth: 26.29%

BETA: 0.61

Cash: 1.25B

Debt: 9.13B


Stock breakdown:

Looking at the dividend yield and the payout ratio we can tell its more of an income stock as the payout ratio is relatively high, definitely higher than the 60% max I normally like to see. But it does have a nice yield of 3.48%.

The profit margin with Kellogg’s is lower than the 10% I like to see, but 8% is fairly close so am not to worried about it. We can see that they make most their returns from their equity, with that being 33%.

Currently Kellogg is supporting a P/E ratio of 20.89, to me this indicates it’s around fair value. If we compare this to the average P/E ratio of the food processing industry which is 28.39 its less than the average for its industry. [2]

Kellogg’s EPS over the last 12 months ending June 30th 202 was $3.17, which was an increase of 26.29% which is extremely respectable. What is great to see, especially in this climate, is a company which is able to grow their earnings per share. [3]

The Beta of K is 0.61 which presents itself as a fairly stable stock price compared to the overall market.

Turning our heads towards the cash to debt level, we see they have much more debt compared to cash on hand. It is fairly worrying to see so much debt even compared to EBITDA and would be nice to see Kellogg’s get the debt to a more controlled level. [4]

A thing which is good from Kellogg’s is that they have expanded their Illinois Conservation Grant program which supports farmers to adapt to climate change. They have been able to prevent more than 5,440 tons of CO2e into the atmosphere which is equivalent of removing more than 13 million vehicle miles off the road. [5]

Kellogg’s is providing more than 1.3 million servings of food to help support the people and communities impacted by Hurricane Laura. [6]

It seems to me that Kellogg Company is a fairly socially responsible company, but it would be nice to see less debt and the payout ratio to be brought down a bit.


General account summary

There has been a major change up in terms of the challenge portfolio. Due to my personal changing circumstances the portfolio has been moved into my S&S ISA so the investment as a whole is in a tax wrapped account. There has been 8 stocks selected to grow and each has had at least £50 invested. For personal reasons I am pausing the £5 weekly investment so I can bulk up my emergency account. I won’t be stopping the weekly stock review and moving the Portfolio into the ISA I have created a specific pie on Trading212 so it can be kept separate from my main investment.

Putting the new portfolio inside the pie will also allow me to carry on the charitable donation part of this website and page. This was an aspect I really wanted to carry on as I enjoy being able to give back to the community and help spread knowledge at the same time.

I am hoping once my personal life is more settled that I may be able to restart the £5 weekly investments again.

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What is:

P/E ratio EPS Payout ratio BETA Dividend

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Trading212 referral

[1] Kellogg’s Royal Warrant

[2] Food Processing Industry P/E average

[3] Kellogg’s EPS growth 26.29%

[4] Debt level of Kellogg

[5] Illinois Conservation program

[6] Donation of 1.3 million servings of food due to Hurricane

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