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Kraft Foods (KFT) announces it will recommend to its board a $2 per share annual dividend for...

Kraft Foods (KFT) announces it will recommend to its board a $2 per share annual dividend for Kraft Foods Group shareholders after sizing up the impact on free cash flow from the upcoming split of the company.
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Comments (9)
  • maillot jaune
    , contributor
    Comments (162) | Send Message
     
    Considering the present-day KFT has been paying $0.29 a quarter for a few straight years with no raise, this is excellent news for the KRFT N.A. grocery side.

     

    I wonder what MDLZ will pay, if anything?

     

    Long: KFT
    7 Sep 2012, 09:47 AM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    we love the dividend news
    7 Sep 2012, 10:24 AM Reply Like
  • zulu.andre
    , contributor
    Comments (13) | Send Message
     
    Does anyone have an inkling what Kraft Foods will be valued at when split?
    7 Sep 2012, 10:06 AM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    we see the value coming in to forms:

     

    1. Kraft Foods (Grocery) is cleaning house and overhead, streamlining, and rewarding shareholders, with a $2.60 EPS and a $2 dividend we see a 2013 starting value of $28.57 (7% div as a floor)

     

    2. Mondelez, showing the growth side of the split in developing markets, and a $1.50-1.55 EPS but fx of $0.15 factored in based on a 2011 horrible fx move, we see coming back so $1.70 at 23x $39.10

     

    combined company value of $67.67 then less a 10% year factor so $60.90 at end of 2013. This equates in our model of a $51 price target now, which the market is not baking in bc the Mondelez CFO was so extremely conservative which is actually great for our purposes!
    7 Sep 2012, 10:33 AM Reply Like
  • nicthu
    , contributor
    Comments (48) | Send Message
     
    You probably meant "two forms," but in any case, (as noted by Dividend Growth Machine below) you neglected to account for the split factor of 1/3 for KRFT shares. Combined company value (of KFT) in your analysis should be calculated as $39.10 + $28.57 / 3 = $48.62. Much closer to your $51 price target!

     

    Also just as a further piece of information for us to ponder, the MDLZ dividend may be around 52 cents per share (based on $1.16 for KFT, less the $0.64 of that that KRFT stated was their portion in the 10-12B/A form [page 47 of 8/16/12 version]), giving a yield of 1.3% based on your projected price per share.
    7 Sep 2012, 02:50 PM Reply Like
  • Dividend Growth Machine
    , contributor
    Comments (1592) | Send Message
     
    When interpreting the EPS and dividend amounts, it is worth keeping in mind that shareholders will get 1 share of Kraft Foods Group (the North American grocery business) for every 3 shares of the existing KFT. That's one reason why the projected EPS for the spin-off is considerably higher than the entire company's current EPS.
    7 Sep 2012, 10:59 AM Reply Like
  • romilar
    , contributor
    Comments (699) | Send Message
     
    Machine,this 1/3 type of move has not worked so well for DUK shareholders.Do you see the dollar amount in a pre-spun KFT,pulling back substantialy post split and staying there for the near future?
    7 Sep 2012, 03:45 PM Reply Like
  • Dividend Growth Machine
    , contributor
    Comments (1592) | Send Message
     
    romilar: I don't follow KFT closely, so any guess would be purely speculative.
    7 Sep 2012, 06:33 PM Reply Like
  • romilar
    , contributor
    Comments (699) | Send Message
     
    Thanks anyway machine....Keep on digging.
    7 Sep 2012, 10:22 PM Reply Like
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