Why SJM Is a Top Pick for Income-Focused Investors in 2025

The J.M. Smucker Co. SJM has once again rewarded its shareholders by increasing its quarterly dividend from $1.08 to $1.10 per share — a 2% hike. This marks the company’s 24th consecutive fiscal year of dividend growth, reinforcing its commitment to long-term value creation. The next dividend will be paid on Sept. 2, 2025, to shareholders of record as of Aug. 15.

The J.M. Smucker continues to demonstrate strong financial discipline. The company maintains a healthy dividend payout ratio of 43% and an attractive dividend yield of 4.1%. Backed by a robust free cash flow yield of 7.1% and a solid return on investment of 4.8%, the increased dividend appears sustainable for the long haul.

In fiscal 2025, The J.M. Smucker returned $455.4 million to its shareholders through dividends, including $114.5 million in the fourth quarter alone. At the same time, the company is actively deleveraging — planning to pay down about $500 million in debt annually over the next two years. With this strategy, SJM aims to reach a net debt to adjusted EBITDA ratio of 3.0x or lower by fiscal year 2027.

The J.M. Smucker’s steady dividend growth, strong cash flow and disciplined debt reduction plan make it a compelling choice for income-focused investors looking for stability in the food sector.

Stocks Like SJM With Strong Financial Health

Investors looking for stable, shareholder-focused stocks may also consider Mondelez International, Inc. MDLZ and McCormick & Company MKC — two food giants with capital allocation.

Mondelez continues to showcase financial strength, generating $815 million in free cash flow in the first quarter. The company expects over $3 billion in free cash flow this year and has returned $2.1 billion to its shareholders through dividends and buybacks in the same quarter. With a $9 billion share repurchase plan extending through 2027, Mondelez remains committed to rewarding investors.

McCormick also maintains a solid financial position. In first-quarter fiscal 2025, it generated $116 million in operating cash flow and returned $121 million to its shareholders via dividends. McCormick’s strategy balances reinvestment for growth with consistent dividend payments, all while preserving its investment-grade credit rating and strong cash flow generation.

SJM’s Price Performance, Valuation & Estimates

Shares of SJM have dropped 10.7% in the past year compared with the industry’s decline of 10.2%.

From a valuation standpoint, SJM trades at a forward price-to-earnings ratio of 11.41X, below the industry’s average of 15.81X.

The Zacks Consensus Estimate for SJM’s current fiscal year’s earnings implies a year-over-year decline of 8.3%, whereas its next fiscal year’s earnings estimate suggests a year-over-year uptick of 7.7%.

SJM stock currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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