Having stable dividend income could be a boon to savings during current times of market volatility.
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Today, we have shortlisted two confectionery companies that are maintaining decent dividends while facing high cost pressures. Food manufacturing companies Bakkavor Group (GB:BAKK) and Cake Box Holdings (GB:CBOX) hold attractive dividend yields during turbulent times.
The TipRanks Stock Screener tool is a great way to find out which stocks are paying high dividends in a particular sector. We can also use it to screen dividend stocks along with other parameters such as analyst ratings, target price upside, and more.
Let’s take a closer look at these stocks.
Bakkavor Group
Bakkavor is a popular food manufacturing company providing freshly prepared food in the UK, the U.S., and China. The company’s product range includes desserts, salads, sauces, spreads, dips, meals, sandwiches, etc.
In its recently announced half-yearly results, the company saw strong revenue growth of 10% to £1 billion. Being in the food industry, the company has felt the bite of rising inflation costs, which pulled its operating profit down by 9.5% to £42.5 million.
Even though the company is cautious about inflationary pressures, it expects to meet market expectations for its full-year operating profits.
The company announced an interim dividend of 2.77p per share along with the results, which were 5% higher than the previous year. The interim dividend makes up around 40% of the full-year dividend.
The company has the advantage of operating with strong relationships with its customers, as it mainly supplies to grocery retailers. It allows the company to modify its product portfolio based on changing customer needs. Also, it has price point and geographic diversification, which help it maintain profits and provide strong returns for its shareholders.
Bakkavor share price forecast
According to TipRanks’ analyst rating consensus, Bakkavor stock has a Moderate Buy rating.
The BAKK share price prediction is 106.6p, which shows a change of 13% from the current level. The price has a low and high forecast of 95p and 120p, respectively.
Cake Box Holdings
Cake Box Holdings is a manufacturer and retailer of cakes across the UK. The company operates on a franchise model and has around 185 stores. It is mainly known for its egg-free range and personalised cakes.
Recently, the company stated that its full-year profits will be below expectations as inflationary pressures mount. The share prices took a hit and went down by more than 40% in a day.
The analyst still believes the stock’s decline makes for an attractive buying opportunity as the company has a healthy balance sheet. Cake Box is also focused on expanding its geographical presence with more store openings.
Cake Box’s online presence has gained a lot of traction, and it aims to achieve equal contribution from online and brick-and-mortar stores to the company’s total sales. In its full-year results for 2022, Cake Box reported 41% growth in its online sales.
An analyst from Liberum, who has a Buy rating on the stock, saw no change to the company’s “cash-generative growth story underpinned by franchisee demand for new stores and new channels like online and kiosks in supermarkets.”
Cake Box dividends
Considering the strong balance sheet, the dividend story looks good. In the fiscal year 2022, the company’s total dividend was 7.6p per share, including the final dividend of 5.1p per share.
Conclusion
Both the retailers are managing the pressures from high inflation costs in an effective and planned way. These companies have dividend yields higher than the sector average and are backed by a healthy cash position.
The dividend game is strong based on their promising outlook and stable payment power in both good and difficult times.
