Is It Finally Time to Buy This Dividend Stock Now That It Has a 6.6% Dividend Yield?

Kraft Heinz's (NASDAQ: KHC) 6.6% dividend yield can make a significant difference in a portfolio for dividend investors seeking income. Of course, many investors are skeptical of high dividend yields -- and for good reason: high dividend yields are often the result of a stock being under pressure. And, in this case, that is exactly what has happened. As of this writing, shares are down more than 20% year to date and over 30% over the last five years, as investor appetite for the stock has declined during a period of deteriorating sales trends.

But with the dividend stock's valuation now at bargain levels, and the company making some big structural and leadership changes, is it now finally time to buy?

Here are three reasons why I think Kraft Heinz stock may be worth a spot in dividend investors' portfolios today.

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1. Strong free cash flow

Year to date, Kraft Heinz's free cash flow (the company's cash flow from regular operations less capital expenditures) has come in at $2.5 billion, up 23.3% year over year. This easily covers the company's $1.4 billion in total dividend payments over this same period.

This gap between free cash flow and dividends paid indicates that the company's dividend payout is likely sustainable, as it's being easily funded by the cash left over after the business has covered both regular operations and capital expenditures.

Further, it's worth noting how this substantial cash flow is impressive considering the sales backdrop. Kraft Heinz's year-to-date sales fell 2.3% year over year. So, while investors have good reason to worry about Kraft Heinz's sales trends, the company can be praised for its ability to generate cash. Kraft Heinz is a cash cow.

2. A cheap valuation

And shares are cheap. This is not only evident by the stock's dividend yield of 6.6% but also by the fact that shares currently trade at just eight times trailing-12-month free cash flow.

A valuation like this suggests investors essentially have zero growth expectations for the company. In other words, the stock could likely provide a reasonable return for investors from here just by maintaining its current sales and free cash flow levels.

3. Share repurchases remain meaningful

But dividends aren't the only way Kraft Heinz is returning cash to shareholders. It's doing it indirectly via dividends, too. In 2024, the company repurchased $988 million of its shares. And in the first nine months of 2025, it has repurchased another $435 million and said it had about $1.5 billion remaining under its current repurchase authorization. For a company with a market capitalization of under $29 billion as of this writing, repurchases like this make a material difference in reducing share count and increasing the ownership stake of each share of its investors.

Impressively, the company is returning a substantial portion of its free cash flow back to shareholders both directly and indirectly while still producing excess cash flow beyond these payments and repurchases.

Meanwhile, there are both opportunities and risks with the company's recent announcement to separate into two companies: Global Taste Elevation Co. and North American Grocery Co. While management says the move will create two focused companies "to accelerate profitable growth and unlock shareholder value," it's always possible that things don't go as well as hoped.

With the Kraft Heinz split not expected to close until the second half of 2026, investors will need to get comfortable with uncertainty in the meantime. Of course, the stock is arguably already priced for uncertainty -- and that's why I think now is a good time for investors to scoop up shares of this high-yielding dividend stock. Still, investors interested in buying the stock should keep their position small, given the risks associated with the strategic split not going as well as management hopes.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.