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Reasons Buy Mondelez

Mondelez (MDLZ) is a company most dividend growth investors should keep on their watch list. The snack giant was a part of Kraft Foods before the reorganization in 2012. Today, the company owns leading global cookie, cracker, and chocolate brands. However, despite the market leadership, the stock is little followed by SA authors and readers, which is a mistake. There are 3 reasons to buy and add Mondelez to an investment portfolio: rising margins, market leadership and wide moat, and disciplined capital allocation. In addition, Mondelez is a dividend growth stock, a Dividend Challenger, and slightly undervalued. I view Mondelez as a long-term buy.

3 Reasons to Buy Mondelez

Rising Margins

Mondelez is a company becoming more profitable each year. As a result, gross, operating, and net profit margins have risen consistently since 2012. For instance, gross margins were slightly more than 37% in 2012, and today they are over 39%. Similarly, operating margins have risen from about 12% to more than 16%, while net profit margins have nearly tripled to 13%.

The company has successfully removed costs and extracted out inefficiencies. Mondelez’s cost of goods and selling, general, and administrative expenses have trended lower…

Market Leadership And Wide Moat

Mondelez is the global market leader in cookies and crackers. The company is also a significant player in chocolates and candies and owns market-leading regional and local brands. Mondelez has nine international brands including Oreo, belVita, Toblerone, Milka, and Cadbury. In addition, the company owns 65 smaller local and regional brands. Major local brands in the cookie and cracker markets are Wheat Thins, Ritz, Triscuit, LU, and Chips Ahoy. In the chocolate market, major local brands are Lacta, Alpen Gold, Marabou, Freia, and Cote d’Or…

Disciplined Capital Allocation

Mondelez has a disciplined capital allocation policy taking into account future growth and returning cash to shareholders. The priorities in order are reinvesting in the core business, growth-enhancing M&A, dividend growth & share repurchase, and debt payment…

The focus is on growth-driving future revenue and earnings growth. This focus is essential since dividend growth is dependent on both…

Please read the complete article at my profile on Seeking Alpha for 3 Reasons to Buy Mondelez.

Disclosure: Long MDLZ


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