General Mills (NYSE: GIS)

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General Mills (NYSE: GIS): Happy Employees, A Healthy Business And a Solid Stock

by Jeannette Di Louis, Investment U Research
Tuesday, February 2, 2010

Despite the recession and mass of corporate cost-cutting measures that have resulted in America’s unemployment rate shooting to 10%, here’s a company that is bucking the trend.

Not only that, it’s actually treating its employees well.

For the third straight year (and eighth time overall), packaged food giant General Mills (NYSE: GIS) made it onto Fortune’s “100 Best Companies to Work For” list.

According to Mike Davis, senior vice president of General Mills’ Global Human Resources, this philosophy means more than just being “nice.” It makes good business sense:

“General Mills has created a successful culture by combining attention to development with the kind of support that does not require employees to lose sight of family and community commitments. We also know that talented, engaged employees drive customer value and business performance. We see the competitive advantage of building and promoting great leaders and, in fact, 80% of our managers come from within the company.”

That “competitive advantage” has shaped General Mills into one of the world’s leading food companies. It operates over 100 companies with top-selling brands like Cheerios, Häagen-Dazs, Betty Crocker, Pillsbury, Green Giant and Progresso.

General Mills: Guaranteed Business and a Dividend to Boot

Granted, General Mills is operating in a virtually downturn-proof sector – consumer goods. No matter how the economy is faring, people still need to eat.

And even though the food industry is highly competitive, the company’s winnings brands have performed well, even as consumers look to cut costs wherever they can.

In the last quarter, General Mills notched up a 50% jump in profits to $566 million ($1.66 a share), as revenues rose by 2% to $4.1 billion.

And even during the worst economic climate in a generation, the firm enjoyed decent growth in net sales, net earnings and dividends per share during its fiscal 2008 and 2009 year.

That allows the company to pay out a healthy annual dividend of $1.96 per share (2.7% yield). And if you read my colleague Louis Basenese’s column on choosing dividend stocks, you’ll know exactly how lucrative these firms can be over time. That’s even more important during uncertain economic times when many investors flock to solid companies in safe, recession-proof industries.

So while General Mills might not be the sexiest stock out there, one look at its performance since the March 2009 market lows demonstrates that it makes up for it in terms of share price appreciation and income generation.

Good investing,

Jeannette Di Louie