Conagra Brands (CAG) Shares Drop 35%, Dividend Yield Hits 8.2%
Written by Emily J. Thompson, Senior Investment Analyst
Source: Fool
- Stock Price Decline: Conagra Brands' shares have fallen over 35%, pushing the dividend yield up to 8.2%, reflecting market concerns about its future performance and potentially impacting investor confidence.
- Weak Sales Performance: In Q2 of fiscal 2026, Conagra's overall sales declined by 6.8% and organic sales fell by 3%, indicating that the shift towards healthier food options is pressuring its business and further weakening its market position.
- Impairment Loss Impact: The company reported a $0.94 per share impairment charge in Q2, resulting in a loss of $1.39 per share, which suggests that its brand values are below expectations and may affect future capital allocation and investment decisions.
- Dividend Sustainability Risk: Although the quarterly dividend stands at $0.35, the payout ratio has exceeded 100% over the past year, and the board has previously cut dividends when ratios spiked, raising concerns about the sustainability of the dividend and prompting investors to reassess their risk exposure.
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Analyst Views on CAG
Wall Street analysts forecast CAG stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for CAG is 18.92 USD with a low forecast of 16.00 USD and a high forecast of 22.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
14 Analyst Rating
1 Buy
12 Hold
1 Sell
Hold
Current: 17.950
Low
16.00
Averages
18.92
High
22.00
Current: 17.950
Low
16.00
Averages
18.92
High
22.00
About CAG
Conagra Brands, Inc. is a branded food company. The Company’s segments include Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice. The Grocery & Snacks segment includes branded, shelf-stable food products sold in various retail channels in the United States. The Refrigerated & Frozen segment includes branded, temperature-controlled food products sold in various retail channels in the United States. The International segment includes branded food products in various temperature states, sold in various retail and foodservice channels outside the United States. The Foodservice segment includes branded and customized food products, including meals, entrees, sauces, and a variety of custom-manufactured culinary products that are packaged for sale to restaurants and other foodservice establishments primarily in the United States. Its brands include Birds Eye, Duncan Hines, Healthy Choice, Marie Callender's, Reddi-wip, Slim Jim, and Angie's BOOMCHICKAPOP.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Conagra Brands (CAG) Shares Drop 35%, Dividend Yield Hits 8.2%
- Stock Price Decline: Conagra Brands' shares have fallen over 35%, pushing the dividend yield up to 8.2%, reflecting market concerns about its future performance and potentially impacting investor confidence.
- Weak Sales Performance: In Q2 of fiscal 2026, Conagra's overall sales declined by 6.8% and organic sales fell by 3%, indicating that the shift towards healthier food options is pressuring its business and further weakening its market position.
- Impairment Loss Impact: The company reported a $0.94 per share impairment charge in Q2, resulting in a loss of $1.39 per share, which suggests that its brand values are below expectations and may affect future capital allocation and investment decisions.
- Dividend Sustainability Risk: Although the quarterly dividend stands at $0.35, the payout ratio has exceeded 100% over the past year, and the board has previously cut dividends when ratios spiked, raising concerns about the sustainability of the dividend and prompting investors to reassess their risk exposure.
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LyondellBasell and Other High-Yield Stocks Face Risks
- LyondellBasell Financial Struggles: The chemicals company reported in Q3 2025 that it faces market challenges, with a projected Q4 performance unlikely to improve, resulting in a $3.78 per share loss and a 47% year-over-year decline, which could impact future dividend payments.
- Alexandria Realty Dividend Cut: As a medical office REIT, the company cut its dividend in December 2025, with the next payment in January 2026 expected to yield only 5.3%, indicating that the high yield may not be as attractive as it seems.
- Conagra Brands Underperformance: Although the packaged food company reported earnings of $0.89 per share in the first half of fiscal 2026, it still posted a loss due to one-time charges, leading to a payout ratio nearing 85%, highlighting the investment's high-risk nature.
- Risks of High-Yield Stocks: Considering LyondellBasell, Alexandria Realty, and Conagra Brands, these high-yield stocks all exhibit significant financial issues, making them unsuitable for conservative investors, who may be better off seeking lower-yielding consumer staples with stronger fundamentals.
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