Is B&G Foods Stock a Long-Term Buy?
Key Points
B&G Foods is a small packaged food company with a very large 13% dividend yield.
The company isn’t getting one important task done very quickly.
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Most investors looking at B&G Foods (NYSE: BGS) are likely doing so because of the stock's 13% dividend yield. To put that yield into perspective, the S&P 500 index (SNPINDEX: ^GSPC) yields around 1.1%, and the average consumer staples company yields 2.1%. Before you leap on the opportunity to add an ultra-high-yield stock to your portfolio, you need to understand the risks involved.
B&G Foods knows it has a problem
B&G Foods cut its dividend 60% in 2022 and hasn't increased it since the cut. When the company announced the dividend cut, it explained that the reduction was needed so that management could focus on strengthening the company's balance sheet.
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Cutting the dividend was the right business decision. However, B&G Foods hasn't exactly made quick work of strengthening its balance sheet. In the fourth quarter 2025 earnings update, more than two years after the cut, the company noted that its sale of the Green Giant frozen vegetables business was in keeping with its "ongoing effort to divest brands and product lines that are non-core to B&G Foods' long-term strategy, sharpen our focus and reduce long-term debt."
Leverage is a risk you shouldn't ignore
The real problem is that B&G Foods' leverage is way higher than that of its branded food peers. For example, B&G Foods ended 2025 with a debt-to-equity ratio of 4.4x. General Mills (NYSE: GIS), which tends to carry a fairly heavy debt load, was at 1.4x. Troubled Kraft Heinz (NASDAQ: KHC) had a debt-to-equity ratio of just 0.5x. In fact, B&G Foods' debt-to-equity ratio is higher now than it was at the time of the dividend cut.
Worse, B&G Foods only covered its interest costs by 1.3x in 2025. By comparison, Kraft Heinz's times interest earned ratio was 4.7x, and General Mills' was around 5.4x. Once again, B&G Foods' times interest earned ratio is lower now than when it cut its dividend. Simply put, the high yield on offer comes with a lot of financial risk.
Industry headwinds aren't helping
The entire consumer staples sector is facing headwinds right now, as consumers tighten their budgets and high energy prices hint at increasing pressure on profit margins. B&G Foods is doing what it needs to do to ensure its survival, but most dividend investors should probably watch this high-risk, ultra-high-yield stock from the sidelines until its leverage improves.
Should you buy stock in B&G Foods right now?
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Reuben Gregg Brewer has positions in General Mills. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.
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