Reasons Why I Don't Invest In Kraft Heinz Or Anheuser-Busch For My Dividend Growth Portfolio

The financial news has been dominated by the earnings results, dividend cut and SEC investigation announced by Kraft Heinz Co. (KHC) on the evening of February 21, 2019. The company took a non-recurring impairment charge of $15.4 billion to write down goodwill and intangible assets of the Kraft and Oscar Mayer brands’ trademark. In addition, Kraft Heinz announced an SEC subpoena on its accounting policies and internal controls in October, and the company missed both revenue and EPS estimates for 4Q2018. Even more importantly, it announced a dividend of only $0.40 per share, which was cut from $0.625, or a decrease of roughly 36%. The stock cratered in response and fell nearly 30% in one day.
I have periodically looked at initiating a position in Kraft Heinz but have not yet done so. Despite the dividend cut, the huge drop in stock price has placed the dividend yield back over 4.5%, and the stock is undeniably cheap, trading at a P/E ratio of about 11.0. The stock has dividend growth potential. I asked myself, "Should I buy?" Several Seeking Alpha authors have recently argued that there is value in the stock. But my answer, as in my earlier article on Kraft Heinz, is still the same: I am staying away. This brings me to the reasons why I am not buying Kraft Heinz, Anheuser-Busch InBev SA/NV (BUD) or even Restaurant Brands International Inc. (QSR) for my dividend growth portfolio. These are all companies controlled and managed by 3G Capital. I will outline the reasons below.
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