Key Takeaways
- Kraft Heinz yields 6.6%, nearly double J.M. Smucker’s 3.4%, but its dividend has been $1.60 a share a year since fiscal 2020.
- Smucker announced its 25th straight yearly dividend increase in July, and its dividend took 29% of free cash flow over the twelve months to July 31, 2026.
- Kraft Heinz’s dividend took 50% of free cash flow over the twelve months to June 27, 2026, and analysts expect 64% in fiscal 2026 as it spends to turn its U.S. business around.
- Kraft Heinz agreed on Nov. 4 to sell its North American coffee business for $650 million and put the proceeds toward debt.
Any retiree hunting for dividend income in the grocery aisle is going to run into Kraft Heinz (KHC) and J.M. Smucker (SJM).
Both just lined up their next checks: Smucker declared its $1.12 quarterly dividend on Oct. 22, and Kraft Heinz its $0.40 on Nov. 4.
Kraft Heinz yields 6.6% to Smucker’s 3.4%. So which one is the better dividend stock for a retiree?
| Metric | Kraft Heinz (KHC) | J.M. Smucker (SJM) |
|---|---|---|
| Forward dividend yield | 6.6% | 3.4% |
| Dividend growth, 5 years | 0.0% a year (fiscal 2020-2025) | 4.1% a year (fiscal 2021-2026) |
| Yearly raises in a row | None | 25 |
| Cash dividend payout ratio, TTM | 50% (to June 27, 2026) | 29% (to July 31, 2026) |
| Cash dividend payout ratio, forward | 64% (fiscal 2026) | 40% (fiscal 2027) |
| Net debt/EBITDA | 2.7x | 2.9x |
Source: TIKR; Smucker’s raise count is its own.
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Kraft Heinz is paying for a turnaround
Kraft Heinz has paid $1.60 a share a year since fiscal 2020, and the business behind that check is shrinking. Third-quarter net sales fell 2.0% from a year earlier to $6.1 billion, and operating income dropped 14.6%.
CEO Steve Cahillane says “Our 2026 operating plan to turn around the U.S. business and accelerate growth internationally is on track,” but that plan costs money. Kraft Heinz expects adjusted operating income to fall 16% to 18% at constant currency this year as it spends up to $700 million more on its brands, a level management plans to keep in 2027.
The dividend is covered for now, taking a comfortable 50% of free cash flow over the twelve months to June 27, 2026. Free cash flow has covered it every year since it fell short in fiscal 2022:
On Nov. 4, Kraft Heinz also agreed to sell its North American coffee business to One Rock Capital Partners in a deal valued at $650 million, keeping a 30% stake, with about $500 million of net cash going to debt when the deal closes in mid-2027. The risk is that U.S. sales keep slipping while costs climb: management now expects inflation slightly above 5% in 2027.
Smucker keeps raising its check
Where Kraft Heinz’s dividend has stood still, Smucker’s keeps climbing. It announced its 25th consecutive yearly increase in July, and its dividend grew 4.1% a year from fiscal 2021 to fiscal 2026 ($3.60 to $4.40 a share), though fiscal 2026’s rise was a slower 1.9%.
In its first quarter of fiscal 2027, ended July 31, net sales rose 5% to $2.2 billion. For the full year, though, Smucker expects net sales to slip 1% to 2%.
Free cash flow has covered its rising dividend payments every year since fiscal 2017:
Coverage got tight in fiscal 2024, at 68%, before free cash flow climbed to $1.16 billion in fiscal 2026. The dividend took a well-covered 29% over the twelve months to July 31, 2026, flattered by first-quarter free cash flow of $337.3 million against an outflow of $94.9 million a year earlier.
Smucker carries a bit more debt, but it reached its leverage target of 3x or below ahead of schedule, and CFO Tucker Marshall says “we remain committed to the quarterly dividend.” The main risk is coffee, where management is planning cautiously given commodity costs and a stretched consumer.
So which dividend wins?
J.M. Smucker is the better dividend stock for retirees. Retirees seeking income want a check they can count on, and Smucker’s comes with more room and a 25-year habit of growing. Its dividend takes 29% of free cash flow now and 40% on fiscal 2027 estimates, against 50% and 64% at Kraft Heinz.
And Kraft Heinz’s room is shrinking. Analysts expect its free cash flow to drop to $2.96 billion in fiscal 2026 and stay below $3 billion through fiscal 2028:
This isn’t to say Kraft Heinz’s dividend is in danger. A 64% payout is still covered, and the yield is hard to ignore: $10,000 pays $660 a year, against $340 from Smucker. Even at Smucker’s 4.1% five-year rate, that $10,000 would pay about $488 in year 10, and wouldn’t pass Kraft Heinz until about 2043.
It’s just that Kraft Heinz pays its bigger check from a business that’s still shrinking, while Smucker’s coverage leaves room for the raises to keep coming. Of course, if Kraft Heinz’s turnaround gets U.S. sales growing again and free cash flow back toward fiscal 2025’s $3.66 billion, that 6.6% yield would be awfully hard to pass up.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
