A Once-in-a-Decade Opportunity: 1 Magnificent Dividend Stock Down 30% to Buy Right Now

Here's a simple way to think about General Mills (NYSE: GIS) right now: It makes the Cheerios in your pantry, the Pillsbury biscuits in your fridge, and the Blue Buffalo in your dog's bowl, yet its stock is priced as if people are about to stop buying all three.

Shares closed at $34.60 on Nov. 10, about 30% below their 52-week high of $49.59 and about 32% lower than five years ago. At that price, the $2.44 yearly dividend works out to a dividend yield of about 7%, so every $1,000 invested pays roughly $70 a year.

That's a lot of income from a company that has paid a dividend without interruption for 128 years, counting the business it grew out of. A record that long, at a price this low, is why I think this is the rare kind of setup worth acting on.

Image source: Getty Images.

The cereal aisle went quiet

There's been a slump, and it has real causes. Grocery bills have stretched families thin, and General Mills itself describes a "challenging consumer backdrop" that will keep its food aisles growing slower than usual this year. Last year, the company responded by lowering base prices on products that had gotten too expensive compared to cheaper options. That helped steady how much shoppers bought, but it squeezed profit at the same time that costs for grain, freight, and packaging kept climbing.

The latest quarter shows that squeeze. Organic sales, which exclude businesses bought or sold, were flat, and adjusted earnings per share fell by 13%. For the full year, management expects adjusted earnings per share of $3 to $3.20. That's a down year, but not a broken company. Investors are paying about 11 times those expected earnings, a low price-to-earnings ratio for a food company whose brands sit in nearly every kitchen.

The fix is already on the shelf

What gives me conviction is what the company is putting in front of shoppers. Its protein cereals, led by Honey Nut Cheerios Protein, now generate about $200 million in retail sales and are growing at a double-digit rate. Lucky Charms, Reese's Puffs, and Cinnamon Toast Crunch reached more households and grew retail sales after declining last year. Pillsbury reworked 70% of its canned dough line with more cinnamon, more icing, and flakier layers, and retail sales stabilized after eight straight quarters of decline.

In August, General Mills finished removing certified artificial colors from every U.S. cereal, including Lucky Charms and Trix, and it plans to finish the rest of its U.S. grocery lineup by the end of 2027. Pets are a bright spot, too. Love Made Fresh, Blue Buffalo's refrigerated dog food, grew retail sales about 30% over the prior quarter. And sales to restaurants and school cafeterias, along with sales overseas, each grew at a mid-single-digit pace.

The person driving that work is getting the top job. Chief Operating Officer Dana McNabb, a 27-year company veteran who runs all four operating segments, becomes CEO on Jan. 1, 2027. "Returning the company to profitable growth is the priority, and we know how we'll get there," she said.

The dividend is the part of income investors will watch most closely. Management says it is "fully committed" to the payout but will hold it steady, skip buybacks, and use spare cash to pay down debt. It's also on track to achieve $750 million in cost savings this year and $3 billion by fiscal 2030, money meant to fund the brands and offset rising costs. The company expects free cash flow, the cash left after running and upgrading the business, of about 95% of adjusted earnings, which still covers the dividend.

That cushion is thinner than it used to be, and a frozen dividend means no raises for a while. Some pieces, like the Wilderness dry dog food line, still need major repairs. But General Mills doesn't need a miracle. It needs cereal, dough, and pet food to keep improving the way they did last quarter. The 7% yield pays you while that happens.

Micah Zimmerman 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.