Dividend Kings In Focus: The Marzetti Company

Up to date on July 22th, 2025 by Felix Martinez

The Marzetti Firm (MZTI) has a dividend observe document that few firms can rival. The corporate has elevated its money dividend for 62 consecutive years, making it one among solely 13 firms within the U.S. with such an extended streak. This places the corporate among the many elite Dividend Kings, a small group of shares which have elevated their payouts for no less than 50 consecutive years.

You may see the whole checklist of all 55 Dividend Kings right here.

We’ve compiled a complete checklist of all Dividend Kings, together with key monetary metrics similar to price-to-earnings ratios and dividend yields. You may obtain your copy of the Dividend Kings sheet (together with monetary metrics similar to price-to-earnings ratios and dividend yields) by clicking on the hyperlink beneath:

Dividend Kings are the “better of one of the best” relating to rewarding shareholders with money and better dividend payouts every year. This text will talk about The Marzetti Firm’s dividend and valuation outlook.

Enterprise Overview

The Marzetti Firm started its operations in 1961 after a number of small glass and associated houseware manufacturing firms mixed. The brand new firm virtually instantly started rewarding its shareholders with quarterly money dividends and finally went public in 1969, the identical 12 months it began operations within the meals service enterprise with the acquisition of the Marzetti model.

The corporate manufactures and distributes a comparatively slender product assortment cut up into two main classes: frozen and non-frozen. It makes salad dressings and varied dips underneath the Marzetti model, frozen breads underneath the Sister Schubert’s and New York manufacturers, in addition to caviar, noodles, croutons, flatbreads, and different bread merchandise underneath a wide range of smaller manufacturers.

The Marzetti and New York manufacturers are money cows for Marzetti, providing its core merchandise, together with dips and dressings, in addition to croutons and frozen breads. The corporate sells what quantities to meal equipment and does it very properly.

Supply: Investor presentation

Nevertheless, The Marzetti Firm additionally has partnerships with main client manufacturers like Olive Backyard, Jack Daniel’s, Buffalo Wild Wings, and Weight Watchers (WW), licensing the respective emblems to provide merchandise for grocery retailer cabinets. A portion of the proceeds of those merchandise goes to the license house owners, however these agreements are a approach for Marzetti to diversify away from its core manufacturers.

Marzetti’s market capitalization is $4.9 billion, and the corporate has generated $1.9 billion in income over the past 12 months. Most of Marzetti’s gross sales are made within the U.S., so forex danger isn’t an element. The corporate sells its merchandise via the retail and foodservice divisions, providing each frozen and non-frozen merchandise via these channels.

Marzetti holds management positions in its core manufacturers, together with New York, Sister Schubert’s, Flat Out (flatbreads), and Marzetti, whereas focusing extra on development via its smaller manufacturers and acquisitions.

Development Prospects

Marzetti reported fiscal Q3 2025 internet gross sales of $457.8 million, a 2.9% lower from $471.4 million in Q3 2024, pushed by the exit from perimeter-of-the-store bakery product strains in March 2024, a later Easter vacation shifting retail gross sales, and a difficult client surroundings with decreased foodservice site visitors. Retail section gross sales fell 2.6% to $241.5 million (0.7% excluding exited product strains), whereas Foodservice gross sales dropped 3.2% to $216.3 million, together with $2.1 million from a short lived provide settlement tied to the February 2025 acquisition of a sauce and dressing facility in Atlanta. Web earnings rose to $41.1 million, or $1.49 per diluted share, from $28.3 million, or $1.03 per share, boosted by the absence of the prior 12 months’s $12.1 million restructuring expenses, although tempered by $1.3 million in acquisition prices. The corporate didn’t present particular This fall steerage, however anticipates Retail development from licensing applications and Foodservice collaboration on new menu gadgets.

Gross revenue elevated 1.4% to a document $106.0 million, pushed by price financial savings and modest price deflation, regardless of decrease gross sales volumes and startup prices for the brand new facility. Promoting, normal, and administrative bills decreased 2.0% to $56.1 million, reflecting decrease compensation prices, although offset by $1.7 million in acquisition-related charges. Working earnings grew 41.9% to a document $49.9 million, aided by larger gross revenue, decreased SG&A, and the absence of final 12 months’s restructuring expenses. The Retail section’s working earnings was $45.6 million, down from $47.3 million, whereas Foodservice working earnings rose to $28.1 million from $24.3 million, supported by core nationwide chain accounts.

The corporate maintained a powerful steadiness sheet, with money and equivalents at $124.6 million and complete belongings of $1.28 billion as of March 31, 2025. Marzetti Colony invested within the acquisition of the Atlanta facility to boost operational effectivity and capability. The Board declared a quarterly dividend of $0.95 per share, reflecting a 5.6% enhance, underscoring its dedication to shareholders. Regardless of client challenges, the corporate’s strategic give attention to innovation, licensing applications similar to Chick-fil-A and Texas Roadhouse, and its new manufacturing facility place it for sustained development and resilience in a dynamic market.

Marzetti’s earnings development has been spotty as a result of it’s closely reliant on risky restaurant gross sales. Due to this fact, the corporate has made quite a few acquisitions up to now to not solely develop its portfolio but additionally to make its income extra predictable.

Supply: Investor Presentation

We anticipate a 5% common annual earnings development over the subsequent 5 years, with practically all of this development pushed by income development. We additionally observe that Marzetti’s development is unlikely to be linear, as expertise has proven that some years are more likely to exhibit declines, whereas others are more likely to present sizable will increase.

Over time, Marzetti has confirmed it could actually develop via a wide range of environments, together with a pandemic, and we don’t see that as altering anytime quickly.

Aggressive Benefits & Recession Efficiency

Marzetti’s aggressive benefits are primarily derived from its distributor partnerships with main retailers similar to Walmart (WMT) and McLane Distributors, in addition to its management positions in classes together with croutons, frozen bread merchandise, and dressings.

Marzetti constructed a distinct segment in these classes through the years. Whereas its heavy reliance upon two distributors for one-third of its income is a possible danger, it additionally means the corporate’s opponents don’t essentially have the identical entry to these massive clients. Certainly, we see Marzetti’s publicity to Walmart as a internet constructive, as Walmart enjoys rising grocery gross sales.

Marzetti is in a powerful place inside its core classes, however that doesn’t make it resistant to recessions. Earnings per share throughout and after the Nice Recession are beneath:

2007 earnings-per-share of $1.45 (lower of 42% from 2006)
2008 earnings-per-share of $1.28 (lower of 12%)
2009 earnings-per-share of $3.17 (enhance of 147%)
2010 earnings-per-share of $4.07 (enhance of 28%)

Income carried out comparatively properly throughout this era, as Marzetti didn’t expertise any vital declines. Income elevated in 2008 in comparison with 2007. Nevertheless, pricing and the price of items suffered, leading to a lower in margins. This led to the earnings declines Marzetti skilled in 2007 and 2008. Notably, the rebound was swift and decisive in 2009 and 2010.

It’s also necessary to notice that Marzetti has a rock-solid, virtually debt-free steadiness sheet. Because of this, the corporate can simply endure tough financial intervals and wait patiently for a restoration.

Nonetheless, Marzetti is much from recession-proof as a result of it sells merchandise to foodservice clients, which undergo mightily throughout recessions and would thus order much less from Marzetti, and shoppers who could turn out to be cash-strapped throughout recessions and eschew the meals equipment that the corporate gives.

Marzetti, nevertheless, proved markedly resilient all through the coronavirus disaster, with only a 9% lower in earnings per share in 2020 and document earnings per share anticipated in fiscal 2024.

Valuation & Anticipated Returns

We anticipate Marzetti to realize a document earnings per share of $6.70 in fiscal 2025, due to an anticipated restoration in gross sales and a pointy easing of price inflation. Shares are presently buying and selling at 26.8 instances this 12 months’s EPS estimate, which is decrease than our truthful worth estimate of 28 instances EPS. If the inventory trades at our assumed truthful valuation stage in 5 years, it would yield a 1.5% annualized return.

Given additionally 5% earnings-per-share development and a 2.1% dividend yield, the inventory may provide a complete annual return of 8.6% over the subsequent 5 years. Because of this, the inventory receives a maintain ranking.

Remaining Ideas

Marzetti is undoubtedly not a high-yield earnings inventory, given its low yield; nevertheless, it does have a formidable observe document of dividend development. Sadly, the present yield isn’t excessive sufficient to justify a place solely primarily based on the dividend. Alternatively, the promising EPS development expectations and the affordable valuation of this Dividend King render it enticing round its present value.