This Stock Yields 6.6% and Has a 127-Year Streak of Never Cutting Its Dividend. Here's Why It's a Buy Now.

When folks think about investing in the stock market, they often view it through the lens of compound returns over time. But some investors may primarily invest in stocks to generate passive income rather than capital gains -- especially those looking to supplement retirement income.

General Mills (NYSE: GIS) has an incredibly impressive 127-year streak of not cutting its dividend, although there have been several multiyear periods when it hasn't raised its payout. So you won't find General Mills on the popular list of Dividend Kings, which are companies that have paid and raised their dividends for at least 50 consecutive years.

Historically, investors have been able to count on General Mills like clockwork for steady passive income. But lately, that passive income hasn't been nearly enough to offset losses in the stock price. Over the last decade, General Mills has delivered a negative total return of 12.4%. The last three years have been especially brutal -- a negative 48.9% total return.

The sell-off in General Mills has pushed its yield up to a multidecade high of 6.6%.

Here's why the dividend stock is a buy now.

Image source: Getty Images.

An industrywide problem

General Mills is facing declining sales and profits in lockstep with the industrywide slowdown in the packaged food sector. Consumers are stretched thin, and companies like General Mills are having difficulty passing along rising costs to consumers.

The longer-term issue is shifting consumer preferences toward healthier and non-processed items. But General Mills has a relatively strong brand portfolio with an emphasis on breakfast meals and snacks, so it should be better positioned than other packaged food companies.

Still, the numbers don't lie, and General Mills' guidance provides little hope for a near-term turnaround.

The good news is that General Mills' dividend is still affordable, and the stock is dirt cheap.

General Mills is prioritizing financial stability

On March 17, General Mills announced that it was selling its business in Brazil to shore up its balance sheet and focus on its highest-margin opportunities. The company has now turned over nearly one-third of its portfolio through acquisitions and divestitures since fiscal 2018 as it prioritizes its best brands and product categories. The divestiture follows up on General Mills' June 30, 2025, announcement that it sold its U.S. yogurt business, which included brands like Yoplait, Go-Gurt, Oui, and Mountain High.

Despite ongoing struggles, General Mills increased its cash and cash equivalents from $521.3 million as of Feb. 23, 2025, to $785.5 million as of Feb. 22, 2026, while cutting down its long-term debt from $11.84 billion to $10.99 billion. The company's balance sheet should continue to improve as cost-cutting pressures, paired with an emphasis on high-margin segments, increase cash flow.

Based on the midpoint of General Mills' fiscal 2026 guidance, the company is forecasting $3.28 in full-year free cash flow (FCF) per share, which is still well above its $2.44 per-share dividend.

Meanwhile, the stock price of $36.80 at the time of this writing is less than 11 times fiscal 2026 expected earnings.

The top buy in the packaged food industry

General Mills is a buy for investors who believe the company's brands are strong enough to stage a successful turnaround. The stock sports a dirt-cheap valuation, and the business is generating enough cash to cover the dividend and pay down debt.

General Mills could take years to return to meaningful growth, but the 6.6% yield provides a worthwhile incentive to hold the stock through this period.

Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.