Campbell Soup Company (CPB), and its subsidiaries, does business in manufacture and marketing of branded convenience food products worldwide. It has four business segments, viz., (1) U.S. Soup, Sauces, and Beverages; (2) Baking and Snacking; (3) International Soup, Sauces, and Beverages; and (4) North America Food Service. The company was founded in 1869 and is headquartered in Camden, New Jersey.

CPB is neither a dividend aristocrat nor a dividend achiever. CPB has been paying dividends since 1980, albeit it has not been growing it consistently. My objective here is to understand if CPB has any potential to be a dividend growth investment.

Trend Analysis

This section looks at trends for past 10 years of corporation’s revenue and profitability. These parameters should show consistently growth trends. The trend charts and data summary are shown in images below.

• Revenue: In general, slowly growing trend, but not consistent (down years in 2002 and 2006). The average revenue growth for last 10 years is 4.6% (with 4.3% standard deviation).
• Cash Flows: Fluctuating operating cash flow. The concern I have is that the free cash flow is less than net income. There is very little room for flexibility in allocating cash for dividends.
• EPS from continuing operation: In general, the EPS has not been consistent. EPS reduced for year 2008.
• Dividends per share: Although dividends are being paid consistently, it’s trend is more or less flat.

CPD Trends

CPB - Data

Risk Parameter Calculation

Here I use the corporation’s financial health to assign a risk number for measuring risk-to-dividends. I have discussed this in more detail at Dividend Tree. The risk number for risk-to-dividends is 2.43.