Be The Investor ResearchCampbell’s Dividend Cut Makes General Mills the Better Income Choice
Campbell cut its quarterly dividend by 36% to redirect cash toward debt, while General Mills held its payout. General Mills now offers more income, but its own high payout ratio leaves limited room for error.
Campbell has already done what General Mills is trying to avoid. On September 3, 2026, Campbell cut its quarterly dividend 36%, to $0.25 a share from $0.39, and said the reset would free about $170 million a year for debt reduction. General Mills chose to hold its payout flat instead.
For an income investor, that decision gives General Mills the immediate advantage. The source article measured its yield at 7.7% on October 7, versus 5.4% for Campbell after the cut. A $10,000 position at those yields would produce about $770 a year from General Mills and $540 from Campbell.
The comparison is not a verdict that General Mills has no dividend risk. TIKR data in the original report showed dividends consuming 85% of General Mills’ trailing free cash flow through August, compared with 69% for Campbell through its August fiscal year-end. Campbell’s lower payout after the reset should widen its future cushion, but that improvement was purchased by reducing shareholder income.
Campbell’s operating backdrop explains the move. Its fiscal 2026 sales fell 5% to $9.7 billion and adjusted EBIT fell 21% to $1.2 billion, according to the source report. Management’s fiscal 2027 guidance called for organic sales to fall 2% to 4% and adjusted EPS of $1.65 to $1.80, down 17% to 24%. Its investor-relations materials describe a business reset rather than a completed recovery.
General Mills is under pressure too, but less drastically. Fiscal first-quarter organic sales were flat, and management expects full-year organic sales between a 1.5% decline and 0.5% growth. It also expects adjusted operating profit to fall 8% to 13% in constant currency. The company plans to keep the dividend unchanged while it reduces leverage toward 3 times EBITDA.
General Mills is therefore the stronger current-income choice, not a risk-free one. It maintained the payment that Campbell cut, and its near-term sales outlook is less severe. Campbell may emerge with a better-covered dividend, but investors must first see whether the smaller payout and debt reduction stabilize the business. General Mills investors should watch free cash flow: at an 85% trailing cash payout ratio, another operational setback would sharply reduce management’s flexibility.