B&G Foods: Recession-Proof Grocery Stock with 10% Dividend Yield?
March 17, 2025
BGS Stock Offers a Compelling Opportunity for Income Investors
Today, I’m going to focus on B&G Foods stock.
Why?
Well, there are growing concerns that a recession could be on the horizon for the U.S. economy.
You see, during economic downturns, consumers really watch where they spend their money. Discretionary spending, which includes eating out, entertainment, and luxury items, slows down. However, people still need to buy essential goods such as groceries and household staples.
This is where B&G Foods Inc (NYSE:BGS) shines.
B&G Foods is considered a consumer defensive company, meaning that it sells products that people need no matter the economic environment or what the stock market is doing. Whether the economy is booming or in a downturn, people still buy food. This makes B&G more resilient compared to companies that rely on discretionary spending.
BGS stock might be worth a closer look for income investors seeking steady dividend payments. It could be a great passive income opportunity.
What Does B&G Foods Do?
Headquartered in Parsippany, New Jersey, B&G Foods manufactures, sells, and distributes a portfolio of household products and shelf-stable and frozen foods in the U.S., Canada, and Puerto Rico. Shelf-stable foods are those that can be stored safely at room temperature for an extended period of time and don’t require special handling.
The company owns several well-known brands, including “Green Giant,” “Ortega,” “Cream of Wheat,” “Crisco,” “Dash,” “New York Style,” “Old London,” “Sugar Twin,” “TrueNorth,” “Vermont Maid,” “Victoria,” “Wright’s,” and several others.
B&G markets and delivers its products both directly and through a network of independent brokers and distributors. Its products reach supermarket chains, foodservice providers, big-box retailers, warehouse clubs, non-food retailers, and specialty distributors. (Source: “Profile,” Yahoo! Finance, last accessed March 12, 2025.)
B&G Food’s Financial Performance: Stable
When it comes to its financial performance, B&G Foods has had its ups and down, which has impacted its stock price over the past few years. Over the past one year, BGS stock has dropped over 32%.
One issue spooking BGS shareholders is that food companies need ingredients, so when those get more expensive, profits take a hit. B&G has worked to pass some of those costs on to customers, but that’s not always easy in a competitive market.
Despite these challenges, there’s some light at the end of the tunnel, and this could be good for BGS stock.
On February 25, B&G Foods reported its financial results for the fourth quarter and full year 2024. Summing up the financial results, Casey Keller, the company’s president and chief executive officer, said, “B&G Foods’ fourth quarter results were in line or slightly above expectations, with some improvement versus prior quarters. We expect first half fiscal 2025 trends to continue to be soft, with sequential improvement in the second half of the year as we lap consumer purchasing changes following high inflation across the packaged foods industry.” (Source: “B&G Foods Reports Financial Results for Fourth Quarter and Full Year 2024,” B&G Foods Inc, February 25, 2025.)
B&G also provided guidance for 2025. It expects;
- Net sales in the range of $1.89 billion to $1.95 billion
- An adjusted earnings before interest, taxes, depreciation, and amortization range of $290.0 million to $300.0 million
- An adjusted diluted earnings per share range of $0.65 to $0.75
Also, B&G Foods continues to generate cash flow from operations. In the entire year of 2024, the company generated $130.9 million from operating activities. This is good news, as this is a key factor in maintaining its dividend payments.
BGS Stock Dividend History: Consistent Payment, High Yield
For income investors, BGS stock offers a great dividend. B&G Foods has been paying dividends consistently for years. Currently, the stock offers a high dividend yield of around 10.1% or pays $0.76 per share. This is significantly higher than what you’d get from most recession-proof stocks or even government bonds.
However, it’s also worth noting that B&G did reduce its dividend in early 2023. Investors were disappointed by that action, but it was necessary to keep the company’s balance sheet in order.
Going forward, B&G Foods’ financial performance is expected to get better, and management giving an upbeat outlook should be music to income investors’ ears. This could mean that higher dividend payments could be ahead for those who own BGS stock.
