Last Update 3/10/25
J.M. Smucker is a name most households recognize, whether it’s from a jar of peanut butter, a cup of coffee, or treats for the family dog. The company has built a solid reputation over the years with brands like Smucker’s, Jif, Folgers, and Milk-Bone. But while the products are well known, the stock has had a rough go lately.
For long-term dividend investors, a strong brand isn’t enough—the numbers need to add up. And right now, Smucker’s financials are sending mixed signals. The dividend is appealing, but there are concerns about growth, profitability, and debt.
Let’s dive into what dividend investors need to know before making any decisions.
Key Dividend Metrics
📈 Forward Dividend Yield: 3.68%
💰 Annual Dividend: $4.32 per share
🔄 5-Year Average Dividend Yield: 3.12%
📊 Payout Ratio: 86.06% (a little high, meaning less room for growth)
📅 Dividend Payment Date: March 3, 2025
⚠️ Ex-Dividend Date: February 14, 2025
Dividend Overview
Smucker’s dividend yield is sitting at 3.68%, which is higher than its five-year average of 3.12%. That makes it look like a great income play at first glance, but there’s more to the story.
One concern is the payout ratio—right now, it’s at 86.06%. That means Smucker’s is paying out nearly all of its earnings to shareholders. When a company has a payout ratio this high, it doesn’t leave much room for reinvestment, and it raises questions about how sustainable future dividend increases will be.
Another factor to consider is the stock price. Smucker’s has been trading lower, which has artificially inflated the yield. In the last year, the stock has dropped from a high of $127.59 down to a low of $98.77.
Despite these concerns, Smucker’s has maintained its dividend for decades and has never given investors a reason to doubt its commitment to paying out. But with financial pressures mounting, the company will need to start showing some improvements in order to keep up this track record.
Dividend Growth and Safety
Smucker’s has been a reliable dividend payer, but the rate of growth has slowed.
✅ The company has increased dividends for over 20 consecutive years
📉 The most recent dividend hike was 3.9%, lower than previous increases
⚠️ A high payout ratio could limit future growth
While Smucker’s has a solid history of rewarding shareholders, its dividend growth has lost momentum. A few years ago, investors could expect increases in the 6–8% range, but the last raise was just 3.9%.
The bigger issue is whether the company can sustain future increases. The payout ratio is already high, and the company reported a net loss of $256.7 million. If earnings don’t recover, future dividend hikes could be minimal—or even put on hold.
Earnings Report Summary
J.M. Smucker’s latest earnings report was a bit of a mixed bag, showing some progress in certain areas while also highlighting a few ongoing challenges. The company reported $2.2 billion in net sales for the third quarter of fiscal year 2025, which was a slight dip of around 2 percent compared to last year. The decline was mostly due to supply chain disruptions and the impact of selling off some parts of the business.
One of the biggest headlines from the report was a net loss per share of $6.22, which raised some eyebrows. But that number was largely affected by one-time, noncash impairment charges tied to the Sweet Baked Snacks segment. When stripping out those adjustments, the company actually posted adjusted earnings per share of $2.61, which was up 5 percent from the same period last year. That suggests the core business is still holding up reasonably well, even with some external pressures.
Looking ahead, Smucker’s also revised its full-year outlook, signaling that it expects some near-term headwinds but remains focused on stabilizing its operations. Management pointed to cost-cutting efforts and ongoing brand investments as key priorities to help navigate the shifting consumer landscape. While the results weren’t perfect, they do show that the company is still pushing forward despite a few bumps along the way.
Chart Analysis
The J.M. Smucker Company (SJM) has been showing some interesting technical movements recently. The chart reveals key price action, volume dynamics, and momentum shifts that provide insight into the stock’s current phase.
Moving Averages and Trend
The 50-day moving average (light blue line) has been trending below the 200-day moving average (dark blue line) for quite some time, which is generally a sign of a prolonged downtrend. However, the recent price action suggests that momentum may be shifting. The stock has rebounded sharply from its recent lows and is now approaching the 200-day moving average. If it can break above this level with strong volume, it could indicate a trend reversal.
There was a significant push higher on the latest trading day, with the stock closing at 117.38, well above its open of 111.14. The wide trading range for the day, with a high of 120.36, suggests strong buying pressure.
Volume and Buying Interest
Volume activity is worth noting. The latest move higher has been accompanied by a noticeable increase in volume. This suggests that institutional investors may be stepping in at these lower levels. Historically, spikes in volume during upward moves can signal stronger conviction from buyers.
Looking at the past few months, volume has been sporadic, with occasional high-volume days, particularly during price declines. This indicated some panic selling earlier, but the latest surge suggests a potential change in sentiment.
Relative Strength Index (RSI) and Momentum
The RSI indicator at the bottom of the chart has been gradually climbing, approaching overbought levels. This indicates that bullish momentum is increasing, but it also means that the stock could be due for a short-term pullback if it becomes overextended.
Previously, the RSI had been stuck in a lower range, reflecting the prolonged bearish sentiment. Now, as it moves higher, it’s a sign that momentum is shifting in favor of the bulls. However, if it crosses into the overbought zone above 70, there could be a temporary pause or consolidation before the next move.
Recent Candlestick Action
The last five trading days have been significant. The stock has made a strong move off its lows, with several consecutive green candles indicating persistent buying interest. The latest candle shows a large intraday range, meaning there was some volatility, but the strong close near the highs suggests buyers were in control by the end of the session.
Prior to this, there were some choppy sessions, with alternating red and green days. This indecision is common in a stock that is trying to bottom out. The recent strong move could be an attempt to break out of that range.
Key Resistance and Support Levels
Right now, the 200-day moving average is acting as an overhead resistance level. If the stock can clear this level convincingly, the next key resistance would be around the 125–130 range, where previous highs were established.
On the downside, support appears to be forming around the 110 level. This was a previous area where the stock found buying interest. If the stock pulls back, watching whether it holds above this level will be important.
The price action is suggesting an inflection point, and the next few sessions could provide more clarity on the stock’s direction.
Analyst Ratings
📉 Downgrades
🔻 TD Cowen downgraded SJM from strong buy to hold on January 8, 2025, adjusting the price target from 130 to 121. The primary reason cited was concerns over the company’s high debt levels and ongoing challenges in integrating the Hostess brand into its operations. While Smucker’s remains a strong player in packaged foods, analysts pointed to margin pressures and increased competition in key product segments as risks moving forward.
🔻 Stifel followed with a downgrade on October 25, 2024, shifting its rating from strong buy to hold while revising the price target from 135 to 125. This was attributed to a slowdown in sales growth, particularly in the pet food division. Analysts did acknowledge that previous supply chain issues had improved, but they remained cautious about whether the recovery would be enough to support further stock appreciation.
📈 Upgrades
✅ Wells Fargo maintained an overweight rating and increased its price target from 130 to 135 on November 27, 2024. The firm pointed to improving gross margins and better cost controls as key reasons for the optimism. Analysts believe the company’s focus on operational efficiency could help drive earnings higher despite broader industry headwinds.
✅ Citigroup also reaffirmed its buy rating while raising the price target from 134 to 137 on the same day. The analysts highlighted Smucker’s long-term growth strategy, with an emphasis on brand innovation and a strong coffee segment as catalysts for future stock performance. While they acknowledged the company’s debt burden, they noted that management’s commitment to improving cash flow was a positive sign.
📊 Consensus Price Target
The average 12-month price target among analysts currently sits at 126.13, with estimates ranging from 119 to 136. This suggests a balanced outlook on the stock, with some seeing upside potential if cost-saving initiatives take hold, while others remain cautious due to lingering financial concerns.
The mix of upgrades and downgrades reflects the uncertainty surrounding Smucker’s ability to navigate changing consumer preferences, operational challenges, and its growing debt load. Investors should keep an eye on upcoming earnings reports and whether the company can continue its margin improvements to support a higher valuation.
Financial Health and Stability
📉 Revenue is down 1.9% year-over-year
💳 Total debt is $7.95 billion with a high 115% debt-to-equity ratio
💵 Operating cash flow is still positive at $1.24 billion
The biggest concern with Smucker’s financials is debt. Right now, the company has a total debt load of nearly $8 billion, which is massive for a business of this size. The debt-to-equity ratio sits at 115%, meaning Smucker’s is highly leveraged.
Revenue isn’t growing, either. Sales are actually down slightly from last year, which isn’t great news for a company that already operates in a slow-growth industry. The packaged food business is facing challenges from changing consumer preferences, inflation, and increased competition from private-label brands.
On the bright side, Smucker’s is still generating strong cash flow, bringing in $1.24 billion in operating cash over the past year. As long as the company maintains this level of cash generation, the dividend should remain safe—but if cash flow starts slipping, that could be a problem.
Valuation and Stock Performance
📊 Trailing P/E Ratio: 16.85 / Forward P/E Ratio: 11.22
💰 Price-to-Book Ratio: 1.81
📉 Stock is down more than 8% in the past year
Smucker’s stock looks cheap based on forward earnings expectations, but those estimates assume the company can stabilize its performance. If earnings come in weaker than expected, the stock could have further downside.
Over the past year, shares have underperformed the broader market. While the S&P 500 is up more than 12%, Smucker’s stock has dropped around 8%. That kind of underperformance signals that investors aren’t confident in the company’s near-term growth prospects.
Risks and Considerations
🔻 High debt levels remain a major concern
⚠️ Declining margins could impact profitability
📉 Earnings volatility could limit dividend growth
🔄 Limited catalysts for future growth
The biggest risk with Smucker’s is its balance sheet. A heavily leveraged company in a slow-growing industry isn’t an ideal combination. The company has been able to manage its debt so far, but rising interest rates and economic uncertainty could make refinancing more expensive in the future.
Another issue is competition. Consumers are shifting toward healthier, fresher options, and while Smucker’s has a strong brand portfolio, it hasn’t shown much innovation to keep up with changing preferences.
Final Thoughts
For dividend investors, Smucker’s is a bit of a mixed bag. On one hand, it offers a solid 3.68% yield and a long history of payouts. On the other, it faces challenges that could limit dividend growth in the future.
The stock is trading at a reasonable valuation, but valuation alone doesn’t make a stock a good buy. Smucker’s needs to improve its financial position, reduce debt, and return to earnings growth before it can be considered a strong long-term dividend play.
For those who already own the stock, it may still provide a steady income stream. But for investors looking to add a new position, there may be better dividend opportunities elsewhere in the market.
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