Kraft Heinz Costs Less Than $22 a Share. Here's Why I'd Still Not Buy One.

Source The Motley Fool

Key Points

  • The Kraft Heinz stock price has dipped 40% over the last five years.

  • With changing consumer tastes, the company saw organic net sales decline 1.3% in Q2.

  • Kraft Heinz offers a dividend yield of 7.2%, but it also cut its dividend in 2019.

  • 10 stocks we like better than Kraft Heinz ›

Over the last five years, as of this writing, Kraft Heinz's (NYSE: KHC) stock price has dropped 40%, with shares now trading under $22.

On the surface, that may sound like a rebound candidate, based on what Kraft Heinz sells. After all, its products, from Kraft Mac & Cheese to Maxwell House coffee, are staples for many homes. Even at less than $22 per share, however, there's a simple reason I still wouldn't buy Kraft Heinz stock.

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A person with covers their face with their hand while sitting in front of a declining price chart.

Image source: Getty Images.

The investable budget

Everyone only has so many investable dollars, and if you're investing in one company, that money isn't going into another. With Kraft Heinz, that creates an opportunity cost. As you invest in the owner of the Jell-O and Oscar Mayer brands, you may not be investing in a higher-growth company that offers more significant share price appreciation opportunities. That's because Kraft Heinz is updating its product line after falling behind in keeping up with changing consumer tastes. That disconnect with consumers is showing up in the revenue totals; in its 2026 second-quarter earnings report, Kraft Heinz reported organic net sales of $6.2 billion, a 1.3% decrease from the prior-year period.

Granted, for income investors, the 7.2% dividend yield the company offers looks attractive, and while it does seem to be in a financial position to continue its payouts, over the years, continued large stock price declines can negate dividend payouts. Also, Kraft Heinz has a high debt load of $19 billion compared to total cash of $2.6 billion, which is always a risk factor for a dividend cut, as the money from those dividend payouts may be needed to pay down debt at some point. In 2019, Kraft Heinz cut its dividend payout by 36% to strengthen its balance sheet.

Given the opportunity cost, I'd pass on Kraft Heinz, as there are other, likely better, investments I'd rather make.

Should you buy stock in Kraft Heinz right now?

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Jack Delaney has no position in any of the stocks mentioned. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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