1 Magnificent S&P 500 Dividend Stock Down 27% to Buy and Hold Forever

For a third consecutive year, consumer-packaged goods stocks will lag the S&P 500. The sector's weakness is so palpable that a screen of S&P 500 members yielding a minimum of 3% and down at least 10% this year yields 11 staple names. That's 11 out of 42 stocks that fit that bill.

General Mills (NYSE: GIS) is one of those offenders and an egregious one at that, as highlighted by a 2025 decline of 27.19%. Combine that weakness with enthusiasm for artificial intelligence (AI) and other glamorous investing segments, and, understandably, market participants are leery of dating General Mills, let alone marrying the stock.

General Mills endured a brutal 2025, but it could be a rebound candidate for long-term investors. Image source: Getty Images.

The company isn't taking market capitalization erosion lightly. It's making demand-juicing price investments across some of its brands, which are paying dividends in the form of improved sales and volumes. More moves to that effect could contribute to a rebound, but interested investors likely need to extend General Mills some latitude.

General Mills can get its groove back

Investors considering General Mills as a buy-and-hold idea are right to demand more than hope the stock has fallen so much that a rebound is the next logical step. There's no such thing as a sure bet in investing, but the Cheerios maker has some encouraging fundamental factors.

Part of the reason the shares tumbled is that the ready-to-eat cereal market, where General Mills is a dominant participant, isn't a high-growth segment. Plus, consumer tastes are shifting. Today's on-the-go families aren't as cereal-devoted as were their predecessors. That's not an alarm bell for General Mills because it has brands, including Nature Valley, that are leveraged for quicker breakfast fixes. In fact, Nature Valley controls nearly a quarter of the domestic cereal bar market.

Additionally, General Mills isn't human-dependent. It's the company behind Blue Buffalo pet food, and while that's not a glamorous category either, that brand is the leader in dog food and one of the top names in cat food. Those positions are relevant to investors because pet owners are often brand-loyal; when they find a brand their pets like, they tend to stick with it.

General Mills is also eyeing a move into fresh pet food, which, relative to the category, is a higher-octane segment. People are eating healthier, and if they believe they can extend their pets' lives by switching to fresh food, many owners will make the move, even if it costs more.

Dividend growth is a priority

Another reason General Mills could be a reliable investment for the long term is its stable dividend income. The company's payout increase streak is brief compared to other consumer staples names, but with a yield of 5.34%, it's one of almost 60 S&P 500 member companies that yield more than 10-year Treasuries.

Plus, its payout ratio of 58% isn't alarmingly high, and its annual dividend obligations consume less than 80% of free cash flow (FCF). Reducing leverage and low-single-digit yearly dividend growth are the points of emphasis for the Betty Crocker parent company in terms of shareholder rewards.

Forty percent of General Mills' debt matures over the next several years, so if the company can resist large-scale acquisitions, it can firm its balance sheet while supporting long-term payout growth.

Todd Shriber 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.