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Quick Read
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General Mills (GIS), Flowers Foods (FLO), and J&J Snack Foods (JJSF) trade at historically cheap valuations (GIS at 8.5x earnings with 7% dividend yield, FLO at 6x free cash flow with 11.1% yield, JJSF at 20x forward earnings with 3.66% yield) and are positioned for 100%-plus upside as interest rates decline and GLP-1 fears fade.
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These packaged food and snack companies were hit by high interest expenses and consumer pullback from GLP-1 drugs, but their established market positions and solid dividend coverage suggest recovery is likely as margins stabilize and rates fall.
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Dividend stocks are not all the same, and while some trade at over 30 times forward earnings, others are trading at bargain-basement prices. Stocks like General Mills (NYSE:GIS), Flowers Foods (NYSE:FLO), and J&J Snack Foods (NASDAQ:JJSF) could be loaded springs that can deliver 100%-plus upside in the next 12-24 months.
Each of these stocks pays you a solid dividend yield and is a cash cow. The problem is, each of them has gotten hit by a slowdown or is grappling with high interest rates or low margins. It has scared away investors, but buying the dip right now can be the smarter move for the long run since these are well-established companies that are likely to recover eventually. Dividend-paying businesses see dips all the time, but if you can buy the dips and reinvest the dividends through them, the recovery will give you more than a growth stock ever could.
General Mills (GIS)
General Mills sells packaged foods like snacks, cereal, and convenient meals, among others. This is the market that got hit by the GLP-1 scare, but investors are misjudging how big the impact is and where the real pain is coming from.
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If we look at sales, it declined from a peak of $20.09 billion in FY2023 to $19.5 billion in FY2025. This isn’t a disastrous decline, and the growth slowdown isn’t without precedent either. General Mills saw revenue decline from $17.9 billion in FY2014 to $15.6 billion in FY2017. The stock fell from a 2016 peak of $64 to a low of around $44.
The decline we are seeing now is from a $90 peak to a current price of $34.8. The decline we saw in the 2010s had a similar impact on profits. So what’s different this time?
It’s interest rates.
General Mills posted $524.2 million in net interest losses in FY2025. In FY2023, net interest losses were $379.6 million. Moreover, apart from interest losses, consumers themselves felt the pinch, and snacks and cereals saw lost sales.
However, a rebound from here is only a matter of time as interest rates eventually come down and margins stabilize. GIS stock trades at just 8.5 times earnings, and you get a 7% dividend yield to bet on a recovery. If you count the buybacks, the shareholder yield rises to 8.6%.
Flowers Foods (FLO)
FLO stock is on a similar trajectory to that of GIS. The company sells baked products and has been on a reliable growth trajectory for decades. FLO stock even matched the Nasdaq’s performance for many years while delivering a solid yield and more safety during downturns. The stock then fell off significantly since mid-2023 as interest rates were raised and GLP-1 fears took center stage.
I believe FLO stock is close to a recovery, as the stock is as cheap as it gets without being ridiculous. The dividend yield is at 11.1%, and management has not cut its dividend. FLO’s payout ratio still covers the dividends despite the margin decline, and analysts expect the margins to claw back over the coming years.
In the meantime, you are paying less than 0.4 times sales and nearly 10 times forward earnings for a business that has grown its dividends for 12 years consecutively while being a cash cow.
The stock trades at just 6 times free cash flow. The average consumer packaged goods business trades at 16 times FCF on the stock market. Historically, FLO stock has traded at over 18 times FCF. Hence, a 100%-plus recovery is likely once things eventually normalize here.
J&J Snack Foods (JJSF)
J&J Snack Foods sells snacks and frozen beverages. Having “snacks” in the company’s name alone has been enough for investors to run away from a stock due to GLP-1 fears. Thankfully, these fears have been fading, and JJSF is showing signs that it is turning the corner.
The stock is down 52% from its highs, and I see a full recovery above $180 within the next two years. I expect the recovery to come even faster if interest rate cuts aren’t delayed significantly, as the dividend yield of 3.66% is on the verge of being competitive against Treasuries.
The stock still trades at a premium at 20 times forward earnings, but this is cheap historically since JJSF stock has traded at a premium valuation historically. The historical forward PE ratio has been around 35x.
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