Last year a 10-year-old named Emma Livingston wrote to Campbell's (CPB). Her sister has celiac disease. She asked the company to make a gluten-free Goldfish. She added a sales pitch of her own. More buyers meant "you'd obviously make even more money." Campbell's named the effort Project Emma. Then the first batch came out looking like sharks.
The problem was gluten. It makes dough springy. Cut a regular Goldfish and it snaps back into its plump shape before baking. The gluten-free dough just stayed stretched. The company hired an outside plant to make the crackers. Its first big run, in March, produced a long fish with a mean grin. George Vindiola, who runs research and development, compared it to the great white in Jaws. Brian Hannigan, the head of innovation, sent the team back. This was "probably not the Goldfish experience that we want to be giving to kids," he recalled thinking. The gap between a smile and a sneer was roughly five mm. The team redesigned the cutter, its size and the depth and curve of the smile, before the last run in May. It worked. The crackers are a little crispier and taste the same. They reach stores in November, right next to the regular kind.
The dividend behind the cracker
The Journal's Jesse Newman tells the sweet story. Behind it sits a harder one. Campbell's is heading for its fourth straight year of falling comparable sales. The stock is down 29% over the past year. The company wants to cut $500 million in costs by fiscal 2030. It has cut more than 550 jobs, about 13% of salaried staff, and closed the Cape Cod chip factory in Massachusetts. And it plans to cut its quarterly dividend to 25 cents a share from 39 cents. That's a 36% cut.
Goldfish is one of the company's four biggest brands, at $1 billion a year. Campbell's bet big on the fish. In 2023 it spent $160 million on a new line in Richmond, Utah, built to turn out over five million Goldfish an hour. It forecast $1.3 billion in Goldfish sales by fiscal 2027. The timing was off. Volumes fell 5% from a year earlier in the four weeks ended Oct. 3, by a BNP Paribas analysis of NIQ data. So the company went back to kids. Pokémon shapes in June. Protein, whole grain and gluten-free versions. The old Snack That Smiles Back jingle is back too.
Our read
This is Investments/Risk (IN04), and the lesson is the dividend, not the cracker. A dividend is a promise a company makes every quarter and can take back any quarter. Campbell's sells the soup Andy Warhol painted. It's still cutting its payout by 36%. The stock fell 29% first, which is often the order of things. The market smells a cut before the board votes on it. For a retiree who counts on checks from a few household names, this is the risk the yield number hides. A high yield on a falling stock is often a warning. We don't hold Campbell's in any book.
The connection is the dividend stock you lean on for income, the one whose check you'd notice if it shrank. This week, look up two numbers for it. How much of its earnings go out as dividends, and which way its sales have moved over the last few years. Four straight years of falling sales was Campbell's setup. If one of your names shows that, and its dividend eats most of its profit, it belongs on the list for your next review. We'll go through the payout with you. You fix the roof while the sun is out, since nobody climbs up in the rain.