Cal-Maine Foods: The Return Of The Dividend

I've been invested in Cal-Maine Foods (Nasdaq: CALM) since April 2017 and until now, I can't say I am displeased with my investment. Despite unfortunate F/X rates that diminished my returns so far to about 13% (in USD it would have been a 25% gain) it has been a reasonable return rate for these 15 months. However, I will be really pleased when I also receive a quarterly dividend for the first time in in August.
But the important question right now is, if Cal-Maine Foods is still a good investment as the dividend has been reinstated or if the train has already left the station? To answer that question, we will look at a few different aspects like the missing pricing power and the missing moat of Cal-Maine Foods, the healthy balance sheet and the growth potential. And of course we take a closer look at the dividend. But we start by describing the cyclicality of the business Cal-Maine Foods is operating in.
A Cyclical Company Cal-Maine Foods is generating its revenue by selling eggs and as we are talking about a commodity, the company is extremely dependent on demand and supply and therefore the classical example of a cyclical company. In spring of 2015, the outbreak of avian influenza affected over 40 million laying hens and led to a 12% reduction in the national laying flock. But since then repopulation efforts have increased numbers above pre-outbreak levels.

(Source: Cal-Maine Foods Investor Presentation)
As consequence from the overpopulation, the... Read more

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