Tyson Foods Inc (TSN) seems undervalued currently, based on it’s historical Price/Earnings ratio and historical dividend yield. It’s sporting a “Good + ‘Buy Signal’“. The price at time of analysis was $95.3, which is Undervalued. A fair price would be around $132.6. Our ‘Value Rating’ for Tyson Foods Inc is 5 out of 5.0, meaning that both PS and PE strongly indicate value, compared to other dividend stocks available.
Tyson has ‘Premier’ status on the Dividend System as it is in the upper percentiles of this month’s stock universe. It’s also increased dividends for 10 years. We consider it a Growth & Income stock.
GROWTH: TSN’s 5-year average dividend growth rate is 24.2%, wonderfully high versus the dividend universe average of 9.7%. Free cash flow has grown at an average rate of 9.1% per year for the last 5 years versus the dividend universe at 6.7%, so TSN is doing nicely.
INCOME: TSN’s current dividend yield is 1.91%, which is below our universe average of 2.35%; the better than average growth helps to make up for this.
SAFETY: We use the Dividend Coverage Ratio to measure the dividend’s safety – higher is better. TSN has a forward DCR of 3.8 which is well above our minimum requirement of 2.0. So (barring other issues) the dividend isn’t in immediate danger of being cut.
QUALITY: Our quality formula gives TSN a ‘Quality Rating’ of 3.8 (out of 5), versus the average of 2.5 for this month’s dividend universe.
TOTAL RETURN: Over the last 15 years, the compound annual growth rate for an investment in Tyson Foods Inc was 13.33% per year with dividends reinvested, versus the S&P500 Total Return of around 9.83% per year for the same time period. As you can see, TSN is doing better than the market with dividends reinvested.
Overall, compared to our universe of dividend stocks, we rate Tyson Foods Inc an ‘A+.’
Please comment with your constructive ideas!