General Mills and Campbell's Both Pay Around 7% in Dividends. Which Stock Is the Safer Option for Income Investors?
General Mills and Campbell's Both Pay Around 7% in Dividends. Which Stock Is the Safer Option for Income Investors?
David Jagielski, CPA, The Motley FoolWed, June 10, 2026 at 2:50 PM UTC
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Key Points -
These popular food companies have both been struggling to grow their sales in recent quarters.
Their profits have also been nosediving.
These stocks have fallen more than 17% this year and are trading at discounts.
10 stocks we like better than Campbell's ›
Investing in dividend stocks can be tricky because while you may want to secure a high yield, you don't want to take on too much risk, either. That's why, when yields get fairly high (i.e., more than 5%), there can be some hesitancy in the market; investors may not necessarily be loading up on these types of stocks, even if there are moderate risks around them.
A couple of particularly high-yielding stocks today include Campbell's (NASDAQ: CPB) and General Mills (NYSE: GIS). These two iconic food companies offer investors yields that are around 7%. That's incredibly high when you consider the S&P 500 is averaging a much more modest yield of just over 1%. Which of these stocks is the safer option right now?
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Are their yields sustainable?
The burning question when it comes to high-yielding stocks is always whether the dividend income is sustainable or not. If it's not, there's little reason to invest in a dividend stock if it simply ends up cutting or suspending its payout in the near future.
By looking at a company's most recent earnings report, investors can get a glimpse of whether the business is growing and just how much coverage it has for its dividend.
Campbell's reported its latest earnings earlier this week, and sales declined 4% year over year, though management said the results were in line with expectations. It's not a huge drop in revenue, and the bigger issue is the "inflation-driven margin headwinds" CEO Mick Beekhuizen pointed out. The key number for investors is the 41 cents per share the company reported in earnings for the most recent period, which ended May 3. That's slightly higher than the 39 cents it pays in quarterly dividends. There's not a huge buffer there, but the dividend appears sustainable for now.
General Mills reported its latest earnings numbers back in March, and it experienced an even worse decline on the top line, with revenue falling by 8% to $4.4 billion for the period ending Feb. 22. What's worse was that its net earnings plummeted by 52% as restructuring costs and lower margins weighed on its bottom line. Overall, its diluted per-share profit was $0.56, falling short of the $0.61 it pays in dividends per quarter. While that doesn't mean a cut is inevitable, there is some cause for concern.
Both stocks are trading at discounts
When there's a heightened sense of risk, investors often demand a discount to compensate for the uncertainty ahead. And with Campbell's and General Mills, that's no exception. Campbell's is trading at a forward price-to-earnings multiple of 10, which is based on analyst projections of how it will do in the year ahead. General Mills is also trading at a similar multiple, as investors may see both businesses as containing comparable risks due to rising inflation and slowing sales numbers.
These types of investments can sometimes be referred to as value traps because, while they seem cheap, that's largely because investors are unwilling to pay more for them, given the challenges their businesses are currently facing.
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Which stock is the better buy?
Both of these stocks are risky and have been struggling, with Campbell's down around 17% and General Mills falling by 26% thus far in 2026.
Neither one strikes me as a particularly safe dividend stock to own, but I believe Campbell's may be the better option today. Its business centers on soups, while General Mills is a big name in cereals, which may carry more of a negative connotation these days due to high sugar content. Its larger business may also require greater cash infusions in order to improve its operations, as it experienced a larger decline in sales in its most recent quarter, and its per-share profit was already below its dividend.
Campbell's stock looks to be in better shape, but there's still risk there, and investors who buy it for its dividend should keep a close eye on it for any further signs of trouble, as this isn't the type of investment you can just buy and forget about.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool recommends Campbell's. The Motley Fool has a disclosure policy.
Source: “AOL Money”
