Whole Foods Market Is Bringing Its Dividend Back
Things must be getting better in the grocery sector for at least one grocery chain. Upscale grocer Whole Foods Market (WFMI) is bringing its dividend back after its recent hiatus. I always love when a company gives cash back to its shareholders.
Whole Foods will be paying investors a 10 cent quarterly dividend beginning in January of next year. The reason why this is important is because the dividend reinstatement shows that the company has confidence in its earnings predictability going forward. This is a far cry from the company’s position in 2008.
Whole Foods suspended its dividend back in 2008 and the company was buried in a mountain of debt due to its merger with Wild Oats. The stock had dropped to the single digits as doubts about the company persisted.
Whole Foods is also doing a better job of generating free cash flow. So far, Whole Foods has generated free cash flow of $328.5 million for 2010. The company has done a good job of simultaneously increasing teh cash on its balance sheet and reducing its debt. The stock is a bit too pricey for me at $50 a share based on its projected earnings growth but I do like the moves that Whole Foods Market is making.
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