Better High-Yield Buy: Kraft Heinz or Conagra Stock

In the quest for high-yield investments, two prominent names in the consumer defensive sector have caught the attention of income-oriented investors: Kraft Heinz (KHC) and Conagra Brands (CAG). Both companies have been struggling to keep up with the broader food industry, leading to high dividend yields. However, the underlying reasons and prospects for these two stocks differ significantly. Let's delve into the details to determine which one might be the better high-yield buy.

Kraft Heinz (KHC)

Kraft Heinz, the result of a merger between Kraft Foods and H.J. Heinz in 2015, has been grappling with a stagnant dividend and lackluster financial performance. The company's dividend has been stuck at $0.40 per share per quarter since it was cut in 2019, reflecting the challenges it faces in turning around its business. Kraft Heinz's focus on a collection of its most important brands has not translated into meaningful organic sales growth, with the brands it is focusing on experiencing a decline in the third quarter of 2024. This lack of progress has led analysts to maintain a 'Sell' rating on the stock, with the consensus EPS estimate moving lower by 1.16% over the past month.



Despite the challenges, Kraft Heinz's market cap has been on a recovery trajectory since March 2020, reaching a peak of $54.21 billion in May 2022. However, the stock has since declined and is on track to trade at an all-time low market cap, currently sitting at $34.47 billion as of January 2025. The company's stagnant dividend and volatile financial performance have raised concerns among income investors, who are looking for more stable and predictable returns.

Conagra Brands (CAG)

Conagra Brands, on the other hand, has been able to increase its dividend for five consecutive years, demonstrating a more stable and consistent financial performance. While the company's adjusted earnings and overall sales have decreased, its organic sales have inched up 0.3% in the fiscal second quarter of 2025. CEO Sean Connolly highlighted the company's strong market share performance in the quarter, indicating that the moves made by Conagra's management team are having a positive impact. Although there are still headwinds to deal with, Conagra's turnaround effort appears to be more developed than Kraft Heinz's, making it a more attractive income stock for investors willing to take on a high-risk/high-reward situation.



Conagra's market cap has been on a steady upward trajectory since 2018, reaching a high of $105.63 billion in 2023. The company's consistent dividend increases and stronger market share performance have contributed to its market cap growth, making it a more appealing option for income investors.

The Better High-Yield Buy

Given the choice between Kraft Heinz and Conagra Brands, investors seeking high-yield investments should consider Conagra Brands as the better option. While both companies have been lagging behind the broader food industry, Conagra's consecutive dividend increases and stronger market share performance make it a more attractive income stock. Kraft Heinz's stagnant dividend and volatile financial performance, on the other hand, have raised concerns among income investors.

In conclusion, Conagra Brands appears to be the better high-yield buy, offering investors a more stable and consistent dividend growth potential. However, it is essential to conduct thorough research and consider the specific investment goals and risk tolerance before making any investment decisions.