Is Flowers Foods (FLO) the Best Dividend Growth Stock with High Yields?

Yahoo

14-05-2025

We recently published a list of the . In this article, we are going to take a look at where Flowers Foods, Inc. (NYSE:FLO) stands against other best dividend growth stocks.
Dividend-paying stocks have been gaining popularity among investors due to their long-term advantages. According to Jeremy Zirin, who leads the US equity team for private clients at UBS Asset Management, companies with a consistent track record of increasing dividends are a smart choice for investors seeking a balanced approach in the current market environment. When markets dipped in April after President Donald Trump announced new tariff policies, investors gravitated toward high-yield dividend stocks. However, as trade tensions began to ease and negotiations progressed, markets recovered. Stocks surged particularly after the US and China agreed to temporarily reduce tariffs. He made the following comment about dividend stocks:
'The higher-dividend-yielding strategies tend to do better when markets are in real turmoil and declining, but if there's more chop, more volatility and potentially upside … you don't want to be overly defensive.'
Historically, companies that consistently increase their dividends have tended to be less volatile and often delivered stronger returns than the broader market, including benchmarks like the S&P Equal Weight Index. According to a report by Guggenheim, from May 2005 through December 2024, firms that either initiated or raised their dividends generated an average annual return of 10.5%. In contrast, companies that cut or suspended their payouts posted just 5.5% annually. The overall market returned 10.4% during this timeframe, slightly behind the dividend growers. The report also highlighted that dividend growth strategies have historically performed well in both rising and falling markets, making them an attractive option for investors focused on long-term gains and downside protection.
According to a report by S&P Global, the growth of global dividend payments had been slowing since the post-COVID recovery, but that trend reversed last year. In 2024, the growth rate unexpectedly accelerated to 8%, with shareholders receiving approximately $180 billion more than the previous year. This increase came as a surprise given the persistent geopolitical and economic challenges. The report also highlighted that several sectors and regions saw record dividend initiations, including the US technology, media, and telecom (TMT) sector, banks in Italy and Spain, Japan's automotive industry, and a general rise in payouts from Mainland China. Even with extreme price fluctuations, dividend payments from the oil and gas sector remained strong. Looking ahead, the report suggested that this high level of dividends is likely to hold steady, with global payouts expected to remain at $2.3 trillion in 2025.
With growing investor appetite for dividend-paying stocks, many companies have responded by gradually increasing their dividend payouts. A report by Janus Henderson revealed that global dividend payments reached a record $1.75 trillion in 2024, reflecting a 6.6% rise on an underlying basis. The overall growth rate came in at 5.2%, slightly held back by a drop in special one-time dividends and the effect of a stronger U.S. dollar. Out of the 49 countries covered in the report, 17—including major economies such as the US, Canada, France, Japan, and China—posted record-high dividend levels. In total, 88% of companies either raised or held their dividends steady over the year.
A female baker in a spotless kitchen carefully decorating a cake.
For this list, we screened for dividend stocks with yields higher than 3% as of May 13. From this group, we further refined our selection criteria by identifying stocks with a dividend growth streak of 10 years or more. The stocks are ranked in ascending order of their dividend yields.
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Dividend Yield as of May 13: 5.58%
Flowers Foods, Inc. (NYSE:FLO) ranks seventh on our list of the best dividend stocks with high yields. The Georgia-based bakery products company reported that its first-half performance in 2025 is expected to benefit from recent business wins, cost-cutting efforts, favorable pricing, and lower commodity costs. However, management cautioned that these tailwinds may taper off in the second half, with rising input costs and ongoing category challenges likely to weigh on results. The company also expressed optimism about its planned acquisition of Simple Mills, which is expected to enhance adjusted EBITDA in 2025 but may temporarily reduce adjusted EPS.
In the fourth quarter of 2024, Flowers Foods, Inc. (NYSE:FLO) posted revenue of $1.11 billion, down 1.6% year-over-year and below analysts' forecasts by $19.7 million. However, net income rose 20.9% to $43.1 million, representing nearly 4% of sales. Adjusted EBITDA increased by 6.3% to $102.4 million, accounting for 9.2% of net sales and reflecting a 70-basis point margin improvement.
For fiscal year 2024, Flowers Foods, Inc. (NYSE:FLO)'s operating cash flow rose to $412.7 million, up $63.3 million from the prior year. The company returned $203 million to shareholders through dividends. The company's quarterly dividend comes in at $0.24 per share and has a dividend yield of 5.58%, as of May 13. It has been rewarding shareholders with growing dividends for the past 22 years.
Overall, FLO ranks 7th on our list of the best dividend growth stocks with high yields. While we acknowledge the potential of FLO as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than FLO but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the .
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