Utz Brands (UTZ): A Stable Dividend Play Amid Snack Industry Growth

Utz Brands (NASDAQ: UTZ), a leading salty snack manufacturer, has emerged as a compelling value investment for income-focused investors. With a five-year dividend growth streak, strong Q1 2025 financial results, and strategic brand expansions, UTZ offers a blend of income stability and growth potential in a sector primed for snacking trends. Here's why the company stands out as a resilient dividend play.

Dividend Discipline Amid Growth

Utz has consistently prioritized shareholder returns, with its dividend per share unchanged at $0.061 quarterly since 2021, reflecting confidence in its cash flow resilience. Over the past five years, the dividend has grown at a 7% CAGR, culminating in a current yield of 1.8%—a solid return in an era of rising rates. This stability is underpinned by a robust dividend payout ratio of just 20% of adjusted EPS, leaving ample room for growth. Investors can take advantage of the upcoming June 16 record date, with the dividend payable on July 14.

Q1 2025: Revenue Beats and Strategic Momentum

In its latest quarter, Utz delivered $352.1 million in net sales, a 1.6% year-over-year increase and a slight beat of analyst estimates. The real story lies in its 2.9% organic sales growth, driven by its Power Four Brands (Utz, On the Border, Zapp's, and Boulder Canyon). Notably, the Boulder Canyon brand, a standout in the tortilla chip category, saw double-digit retail volume growth, while expansion into geographies like the Southeast U.S. and club stores (e.g., Costco) contributed to outperformance.

Despite a 1.6% operating margin (down from 2.8% in Q1 2024), adjusted EBITDA rose 3.9% to $45.1 million, with margins expanding to 12.8%—a testament to cost discipline and productivity savings. The company's focus on domestic sourcing and supply chain optimization also shields it from tariff volatility, reinforcing EBITDA stability.

Valuation: Undervalued Amid Growth Trajectory

With a market cap of $1.94 billion and a trailing P/E of just 15x, Utz trades at a discount to peers like Snyder's-Lance (LNCE) or Diamond Foods (DMND). Its adjusted EPS guidance of $0.85–$0.89 for FY2025 aligns with a 1.8% yield, making it attractive for income investors. Meanwhile, organic sales growth of 2.9% and a low-single-digit revenue outlook suggest sustainable momentum, even as broader salty snack categories face softness.

Risks and Mitigants

• Ending Bonus Pack Program: The temporary promotional tool, which drove incremental volume, is winding down. However, Utz is offsetting this by expanding distribution and launching new products (e.g., Boulder Canyon's spicy flavors).
• Supply Chain Costs: While input costs remain a risk, the company's $90–$100 million capex budget for automation and efficiency should improve margins long-term.

Investment Thesis: Buy Ahead of the Record Date

Utz Brands is a rare combination of dividend reliability and operational resilience in the snack industry. Its Q1 results reaffirm its ability to navigate macro challenges, while its dividend yield of 1.8% and undervalued multiples make it a compelling buy. Investors should consider accumulating shares ahead of the June 16 record date, with the stock offering both income and growth potential.

Final Verdict

With a stable dividend, strategic brand investments, and a disciplined capital allocation strategy, Utz Brands is well-positioned to capitalize on snacking trends. Even with near-term headwinds, the company's track record of margin expansion and geographic diversification reduces downside risk. For value investors seeking income and growth, UTZ is a buy at current levels.