Don’t get me wrong. I love ketchup. A good physician would grab the bottle out of my hands as I’m holding it upside down, banging the bottom to get every last dollop on my French fries. (For that matter, the doctor would probably confiscate the fries as well.)

But health concerns are not central to my decision to take a pass on adding Kraft-Heinz (KHC) to my portfolio. Sure, the dividend yield is a tempting 6%, even after the company slashed its dividend by a third earlier this year. And yes, as a New York Times story today pointed out, the stock has lost half its value over the last year, bringing it to a potentially attractive entry point.

But there just doesn’t seem to be much growth momentum – not even a whiff of it.

With the backing of Warren Buffet’s Berkshire Hathaway and 3G Capital Partners, KHC may have seemed like a good turnaround prospect. But most of the news out of the company during the last 12 months has been negative, and 3G Capital recently reduced its stake by about 10%, according to news reports.

The yield is tempting. The turnaround possibilities are still alive. But I’d pass on this high yield stock and look for something more stable in the consumers staples sector with a lower yield at the moment, perhaps General Mills, Proctor & Gamble or Colgate-Palmolive. Shares were trading at a little under $28 on Tuesday. The analysts’ consensus 12-month price target is just $28.39.

Full disclosure: I’ve owned General Mills forever, through good times and bad; I used to own some P&G and perhaps should have held onto it; Colgate-Palmolive has been on my watch list for years, but I keep waiting for a more attractive entry price.

 

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