Tony the Tiger and Snap, Crackle, and Pop, the engaging promotional characters of Kellogg’s Foods, are as familiar to Americans and the rest of the world as their cereals such as Frosted Flakes and Rice Krispies. Kellogg’s is a blue chip company that retains a strong long-term growth profile and deserves consideration by investors. They encourage small investors with a direct stock purchase plan that bypasses traditional brokers—and their fees. This article describes the company, its history and the Kellogg’s direct stock purchase program. See Resources below for additional information.
Identification
- The Kellogg’s Company markets a wide range of food products with a strong emphasis on convenience foods, cereals, cookies and crackers. The stock is traded on the NYSE under the stock symbol K. In addition to its own brand, Kellogg’s owns Eggo Foods and Keebler Foods as subsidiaries, along with other acquisitions made during the late 1990s and early 2000s.
Size
- Kellogg’s manufactures and markets its food products worldwide from its corporate headquarters in Battle Creek, Michigan. Revenues rose from under $9 billion in 2003 to almost $11 billion in 2006 and in 2007 to $11.78 billion. Operating income for 2007 was $1.87 billion with net income of $1.10 billion. The company has assets of $11.4 billion and as of 2007 employed 26,500 people.
History
- In 1906 William Keith Kellogg came up with what then was a radical idea: ready-to-eat breakfast food. His Battle Creek Toasted Corn Flake Company was an immediate success, and in 1914 the company began to market internationally. Manufacturing plants were open in the United Kingdom and Australia in 1938. Since the end of World War II Kellogg’s has kept up with the accelerated pace of modern life with a string of convenience foods, including Pop-Tarts, Eggo waffles, and NutriGrain foods. Their advertising characters such as Tony the Tiger (beginning in 1956) have become staples of American popular culture. The company began to emphasize nutrition with the acquisition of Worthington Foods, a maker of vegetarian products, in 1999 and the Kashi Company (organic foods) in 2000. They expanded the scope of their convenience foods as well with the acquisition of Keebler Foods in 2001.
Features
- Kellogg’s direct stock purchase program is called Kellogg Direct. The initial investment requirement is very low — just $50 or $25 if the investor sets up automatic monthly investments. There is a one time start-up fee of $10 for those not already stockholders. All or part of dividends can be automatically reinvested at the shareholders discretion. Kellogg’s covers all administrative costs for investments, so there are no further transaction fees. Additional investment can be made with a minimum per transaction of $25 up to a maximum of $100,000 per year. Sales of stock do incur transaction fees.
Considerations
- In addition to the very low minimum investment requirements, Kellogg’s Direct offers some other useful features, including automated transactions if automatic debits are used for investments and safekeeping services for stock certificates. If you have questions you can call Shareholders Services toll free at 1-877-910-5385. You can also order a copy of the Kellogg Direct prospectus. As with any stock investment, research the company’s current condition and future prospects by getting a copy of their annual report and information from independent sources such as the Wall Street Journal or other financial publications.
