Key Points
- Kraft Heinz is a deep-value, high-yielding dividend stock.
- The company has displayed pricing power this year and should report strong.
- Analysts and institutions continue to warm up to Kraft Heinz.
Kraft Heinz (NASDAQ: KHC) has offered deep value and high yield to investors for many years and the outlook for investors' returns continues to improve over time. The stock trades at a low 14x earnings compared to 15.8x for the broad market S&P 500 and anywhere from 20x to 35x for the highest-valued consumer staples. The stock yields close to 5% trading near $34.25 while the S&P 500 pays a paltry 1.72%. Peers in the consumer staples group typically pay 2% to 3%.
The takeaway: Investors looking for value and yield in today’s market may want to consider Kraft Heinz because of catalysts for higher share prices in the works.
Kraft Heinz is in Reversal and Primed for a Rally
The Kraft Heinz story really begins in 2015 when Kraft and Heinz, two consumer staples giants, merged to form today’s company. Fast-forward a bit and you will see that underperformance relative to pre-merger expectations, an accounting scandal and a cut to the dividend sent shares down to the levels they trade at now. Since then, the company has retooled the C-suite, divested itself of underperforming brands, shored up the balance sheet and begun to reinvest in growth. Now, with the global economy on the brink of imploding, Kraft Heinz displays strength within the consumer staples stock sector. The company has demonstrated pricing power in calendar year 2022 and another price increase was recently announced.
The company is slated to report earnings at the end of this month and should perform well. Competitors like General Mills Inc. (NYSE: GIS) show strong organic sales, core sales and margin strength, though Kraft Heinz will have a positive showing in these areas as well. Kraft Heinz should also deliver favorable guidance that could spark the next rally and analysts are taking note. The stock does not boast a robust rating or even a very active analyst community but there is a trend in sentiment and the price target investors should be aware of.
The nine analysts with current ratings have it pegged at a "hold" with a price target of $41 or 20% of upside; the sentiment and price target are firming. The stock has gotten three upgrades over the last six months that have the consensus rating verging on a "buy" and the price target up in the 12-, three- and one-month comparisons. This trend should continue in the wake of the upcoming report and will underpin price action this year and next. Add in the fact that institutions are buying this stock as well and it looks like a very good time to buy.
The latest shoutout comes from Goldman Sachs, which picked the stock from a sector it considers to be richly valued. Analyst Jason English thinks the stock will re-rate higher as headwinds for the sector ease. He upped the stock to "buy" from "neutral" and gave a price target of $43.
The Technical Outlook: Kraft-Heinz Confirms Support
Shares of Kraft-Heinz pulled back to support over the past two months but support is evident at the $32.50 level. With support confirming at this level, it looks like a move to the top of the range near $44.75 is possible by the time the next earnings are released or shortly after. If the stock can get above $44.75 it will confirm a much bigger reversal in the market that could it up to the $55 level or about 60% higher than where the stock trades now. Regardless, support for this stock is strong at this value and it pays a safe 4.75% in yield.
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Companies Mentioned in This Article:| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| General Mills (GIS) | $50.74 | -5.0% | 4.73% | 11.15 | Hold | $62.63 |
| Kraft Heinz (KHC) | $25.73 | -1.2% | 6.22% | 11.75 | Reduce | $30.47 |
About Thomas Hughes
Experience
Thomas Hughes has been a contributing writer for DividendStocks.com since 2019.
- Professional Background: Thomas Hughes is the Managing Partner of Passive Market Intelligence LLC, a market research platform he launched in 2023 with the mission: “We watch the market so you don't have to.” He has worked as a blogger, stock market commentator, and independent analyst since 2010 and has been actively involved in trading and investing since 2005.
- Credentials: He holds an Associate of Arts in Culinary Technology—training that honed his discipline, attention to detail, and ability to anticipate outcomes, all of which carry over into his work as a market analyst.
- Finance Experience: Thomas has been writing about finance and investing since 2011, when he discovered it could be more than a personal passion—it could be a profession. He’s been a contributing writer for DividendStocks.com since 2019.
- Writing Focus: He specializes in the S&P 500, small-cap stocks, dividend and high-yield strategies, consumer staples, retail, technology, oil, and cryptocurrencies. His analysis blends chart-based technical setups with key fundamental insights, helping readers identify actionable trends.
- Investment Approach: Thomas takes a hybrid approach that combines technical analysis with deep fundamental research. He often writes about macroeconomic shifts, earnings trends, and sentiment-based trading signals.
- Inspiration: Thomas first became interested in stocks after attending a seminar on how to buy and sell your own shares. That event opened his eyes to the market's potential and sparked a lifelong interest in investing.
- Fun Fact: Thomas took up model railroading by accident a few years ago—and now he can’t stop running the rails.
- Areas of Expertise: Technical and fundamental analysis, S&P 500, retail and consumer sectors, dividends, market trends
Education
Associate of Arts in Culinary Technology