Conagra and 6 More Food Stock Dividends at Risk, Including PepsiCo and Mondelez

According to a Barron's report, dividends of seven US food stocks are at risk of being cut, including PepsiCo (PEP) and Mondelez (MDLZ), as the consumer staples sector faces persistent headwinds.

Key Stocks at Risk

• Conagra Brands: Shares have fallen 17% year-to-date, pushing its dividend yield above 10%, a level that often signals a potential cut.
• PepsiCo (PEP): Despite strong brands, it faces pressure from rising costs and softer demand.
• Mondelez (MDLZ): The confectionery segment is hit by higher cocoa and sugar prices.
• Meat companies like Tyson Foods and Hormel Foods are struggling with margin compression.

Reasons for Pressure

• Rising costs: Higher raw material, labor, and transportation costs.
• Weakening demand: Consumers are cutting back on discretionary spending.
• Higher interest rates: Increase borrowing costs and reduce the appeal of high-yield stocks.

What This Means for Investors

Investors should monitor each company's payout ratio. If it exceeds 80% of earnings, a cut may be imminent. Companies with high debt levels are also more vulnerable to dividend reductions.