When it comes to rewarding shareholders, Warren Buffett is a maestro. His behemoth of an investment firm, Berkshire Hathaway, manages over $380 billion in investments, mostly in companies with burgeoning dividends.
Tucked within Berkshire’s sprawling landscape of investments is a humble yet intriguing bet on Mondelez International (MDLZ). Fresh off a double-digit percentage bump in its quarterly dividend to $0.43 per share, it’s high time we dissect Mondelez’s market allure.
Mondelez Brands Shine
Berkshire Hathaway is infamous for its knack for putting money into firms with legendary brands that hit home with consumers. A+ branding is more than just a PR win, it offers these companies the enviable power of price-setting, a pivotal aspect for inflating both revenue and net income.
So what’s cooking with Mondelez? In the realm of football quarterbacks, they’re the Tom Brady of the game—unstoppable and winners. Plus, they’re hot on the heels of the big names in chocolate too.
Ever found comfort in a Honey Maid graham cracker or slathered a toast with Philadelphia cream cheese? That’s Mondelez’s magic for you. They closed the quarter ending June 30th with a net revenue surge of 17% year-over-year, and are closing in on $10 billion in revenues.
Financial Radar Points North For MDLZ
Mondelez didn’t just rely on its brand power for this revenue climb. Smart acquisitions like Clif Bar and Ricolino acted as shock absorbers against currency fluctuations that come with being a global player. This is particularly important given how the U.S. dollar has been flexing its muscles lately.
On the earnings front, Mondelez didn’t disappoint. Its adjusted EPS for Q2 scored a remarkable 16.9% year-over-year increase. Strip away the currency complications, and the currency-neutral adjusted EPS catapulted by a mind-boggling 21%+.
To add to the tailwinds, investors are eyeing the share buyback program, which was the cherry on this financial sundae, causing the company’s currency-neutral EPS to eclipse net revenue for the quarter.
Looking ahead, the skies for Mondelez are cloudless and sunny. Industry insiders are forecasting a consistent annual adjusted EPS growth rate of north of 9% for the upcoming half-decade, which falls in lockstep with the sector’s expectations.
The Dividends Is A Hidden Gem
Mondelez’s 2.1% dividend yield may not seem electrifying at first glance, but it stands tall against the S&P 500’s measly 1.5% yield.
Over the past ten years, they’ve rolled out an extraordinary 203.6% cumulative dividend growth. With a manageable projected dividend payout ratio of 49% for the year 2023, Mondelez stands on solid ground for future fiscal stability and growth.
This robust dividend health supports the prediction that Mondelez could likely sustain an annual dividend growth of close to double digits in the foreseeable future.
Is Mondelez the Investment Ticket for You?
In the past year, Mondelez’s stock price sprinted a commendable 16%. But the stock’s forward P/E ratio still sits below the industry average, albeit marginally. At its current share price, Mondelez is more than just a flash in the pan; it’s a prudent pick for those smitten by steady dividend expansion.
Ready to pull the trigger on Mondelez? The signs are hard to ignore, and they’re signaling a resounding ‘yes.’ Indeed, a thorough financial analysis of cash flows reveals upside to $79 by our calculations and $82 per share according to Wall Street.