High-Yield Kraft Heinz Stock Was a Big Letdown in 2024. Could 2025 Be Any Better?

Dividend Yield and Risk - Kraft Heinz offers a high dividend yield of 5.2%, significantly higher than the average consumer staples company yield of 2.5% [1] - The high yield comes with added risk due to the company's disappointing performance in 2024 [1] Historical Challenges - Kraft Heinz has faced a prolonged rough patch since the 2015 merger of Kraft and Heinz, orchestrated by 3G Capital and supported by Berkshire Hathaway [2] - Initial cost-cutting strategies stalled as the company realized it couldn't achieve growth solely through cost reductions, leading to leadership changes and a new strategic plan [3] - The company's strategy of exiting less desirable businesses and refocusing on core brands mirrors approaches used by Procter & Gamble and Unilever, but Kraft Heinz has not seen comparable success [4] 2024 Performance - Kraft Heinz aimed for organic sales growth of 0% to 2% in 2024 but fell short, with organic sales declining by 0.5% in Q1, 2.4% in Q2, and 2.2% in Q3 [5][6] - The "Accelerate" businesses, which are the focus of the company's efforts, also saw declines of 0.5% in Q1, 2.4% in Q2, and 4.5% in Q3 [5][6] - The company is likely to miss its 2024 targets, contributing to its underperformance relative to the broader consumer staples sector [7] Strategic Execution and Future Outlook - Kraft Heinz is following a path that has worked for other companies, such as Unilever, but is struggling with execution in its efforts to refocus on core brands [8] - The company's early cost-cutting efforts may have left it behind peers in innovation and marketing, areas that require time and investment to rebuild [9] - 2024 may be a transition year, and the weak results could set the stage for a rebound in 2025, especially given the company's portfolio of strong brands [10] Investor Sentiment - Despite the high dividend yield, most investors are likely to remain cautious until Kraft Heinz shows progress in reversing its business downtrends [12] - More aggressive investors might see potential in the company's strategy and brand portfolio, but poor execution by management remains a risk [13]