The J. M. Smucker Company (NYSE:SJM) is included among the 14 Best Food Dividend Stocks to Buy According to Analysts. The J. M. Smucker Company’s (SJM) Dividend Consistency Reinforces its Standing Among Food Dividend Stocks The J. M. Smucker Company (NYSE:SJM) is one of those food companies that’s just always been around. You see its brands everywhere — Folgers coffee in the morning, Jif peanut butter on the shelf, and those fruit spreads people have been buying for decades. It’s a big player in North Am ...

Core Viewpoint - J.M. Smucker's stock has significantly declined following its fourth-quarter fiscal 2025 results and updated fiscal 2026 guidance, presenting a potential buying opportunity due to its high-yield dividend and attractive valuation [1][2]. Financial Performance - Net sales decreased by 3% year over year in Q4, but increased by 7% for the full fiscal year [4] - Adjusted earnings per share (EPS) rose by 2% to $10.12, with fiscal 2026 guidance expecting net sales growth of 2% to 4% and adjusted EPS to decline to between $8.50 and $9.50 [4] - Free cash flow (FCF) for fiscal 2025 was $816.6 million, covering $455.4 million in dividend payments, with expectations for FCF to rise to $875 million in fiscal 2026 [10][11] Pricing Strategy and Market Conditions - The company is facing record-high green coffee production costs, leading to planned price increases in May and August [5][6] - Price increases have been implemented across various product lines, including Uncrustables, which saw its first price hike in over three years [7] - The Sweet Baked Snacks segment, which includes Hostess, has underperformed, with net sales down 26% year over year [9] Dividend Stability - J.M. Smucker has raised its dividend for 29 consecutive years, with a current yield of 4.6% due to the stock sell-off [11] - The company has a free cash flow yield of 6.5%, indicating strong potential to support its dividend payments [12] Valuation Metrics - The forward price-to-FCF ratio is 11.5, and the forward price-to-earnings ratio is 10.5, suggesting the stock is undervalued compared to historical averages [13][14] - The company's market cap has fallen to $10.05 billion, with the Sweet Baked Snacks segment contributing only 12% of total net sales [9] Investment Opportunity - Despite the challenges, J.M. Smucker continues to generate substantial free cash flow and offers a reliable dividend, making it an attractive investment for the second half of 2025 [19]

Financial Data and Key Metrics Changes - The company reported a total net sales decline of 3% in the fourth quarter, with comparable net sales decreasing by 1% when excluding divestitures and foreign currency impacts [35][36] - Adjusted earnings per share for the fourth quarter was $2.31, a decrease of 13% compared to the prior year [38] - Free cash flow for the fourth quarter was $299 million, slightly up from $298 million in the prior year, with full-year free cash flow reaching $817 million, an increase of $174 million [43][44] Business Line Data and Key Metrics Changes - The Uncrustables brand achieved over $920 million in net sales, growing by more than $125 million, driven by advertising and distribution gains [8][9] - The Cafe Bustelo brand grew net sales by 19% to approximately $400 million, gaining share in all segments it competes in [10] - The Sweet Baked Snacks segment saw a significant decline in net sales, decreasing by 26% in the fourth quarter, with a 72% drop in segment profit [41][42] Market Data and Key Metrics Changes - In the US retail coffee segment, net sales increased by 11%, with net price realization contributing a 10 percentage point increase [38] - The pet foods segment experienced a 13% decline in net sales, primarily due to unexpected retailer inventory headwinds [21][40] - International and away from home net sales grew by 4%, driven by strong performance in the away from home business [24][42] Company Strategy and Development Direction - The company aims to stabilize and refocus the Sweet Baked Snacks segment for sustainable growth, with a long-term net sales growth expectation of 3% [13][35] - Strategic priorities for fiscal year 2026 include accelerating organic growth, embedding transformation in operations, and maintaining a disciplined financial approach [26][27] - The company anticipates that key platforms, including Uncrustables and Cafe Bustelo, will deliver over 80% of its growth over the next five years [18][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic operating environment, including inflationary pressures and evolving consumer behavior, which necessitated cautious guidance for fiscal year 2026 [27][46] - The company expects full-year net sales to increase by 2% to 4%, with comparable net sales anticipated to grow approximately 4.5% at the midpoint of the guidance range [28][46] - Management expressed confidence in the company's strategy and its ability to deliver long-term growth despite external challenges [31][51] Other Important Information - The company recognized significant impairment charges totaling $980 million related to the Sweet Baked Snacks segment and the Hostess brand [34] - Capital expenditures for the year were $394 million, representing 4.5% of net sales, with a target of approximately 3.5% for long-term strategic goals [44][45] - The company returned approximately $455 million to shareholders through dividends, marking 23 consecutive years of dividend growth [44] Q&A Session Summary Question: What are the expectations for the Sweet Baked Snacks segment? - Management anticipates low single-digit declines in comparable net sales for the Sweet Baked Snacks segment as they work to stabilize the Hostess brand [47] Question: How is the company addressing inflationary pressures? - The company plans to implement price increases to recover higher costs, particularly in the coffee segment and for Uncrustables sandwiches [19][49] Question: What is the outlook for free cash flow? - The company projects free cash flow of approximately $875 million at the midpoint of adjusted earnings per share guidance [50]