Campbell's Soup Stock: Deep Value and a 7% Dividend Yield

Key Points

• Campbell's Soup Company is in position to rebound and enter price recovery as it transitions back to growth.
• Institutions are buying in Q2, providing support at a critical level.
• The 7% dividend yield is safe and reliable.

From a multi-year perspective, Campbell’s Soup Company’s NASDAQ: CPB stock price has experienced a precipitous drop, but it appears to have reached a bottom in 2026, ready for value-oriented buy-and-hold investors to scoop it up.

Weakening sales volume, sluggish trends, and negative guidance revisions have weighed on results, but the company is expected to rebound in the upcoming quarters. The consensus is an inflection and reversion to growth by the middle of fiscal 2027, coinciding with the winter 2027 period, and a quicker recovery may be experienced. Management cited emerging strengths across both core segments in its fiscal Q3 2026 update, underpinned by efforts to simplify operations and improve productivity, sales, and margins.

Buy and Hold CPB for Its 7% Yield and Deep Value

The primary thesis for CPB investment is the dividend and its durability. The company is a high-yielding stock trading at a multi-decade low and is attractive in that regard. The 7% yield is well above inflation and expected to increase over time, albeit at an irregular pace and timing. Details from the fiscal Q3 release suggest the payment is not in any danger.

While the payout ratio relative to adjusted earnings is a bit high, near 85%, it's not unusual for high-quality consumer staples stocks to pay so much.

Looking ahead, investors shouldn’t anticipate another distribution increase until at least calendar 2028. The company is in fine financial health, has ample cash flow, and poses little threat in that regard, but will likely choose to preserve cash flow until growth resumes. Share buybacks are also part of the equation, but only in token amounts, offsetting dilutive impacts and little else.

Value is another reason to own this stock. The 7% yield comes at a value compared to peers, trading at approximately 10X this year’s earnings and approximately 3X the 10-year forecast. Snacking and Meals peers such as Mondelez International NASDAQ: MDLZ, PepsiCo NASDAQ: PEP, and Hershey NYSE: HSY trade at double the valuation in both metrics, suggesting substantial upside over time and more, assuming management can unlock business value.

Analysts' Sentiment Poised for Shift: Institutions Buy Into Value Proposition

Analyst trends align with CPB’s market decline, including numerous downgrades and price target reductions over the past 12 months. However, with the stock trading near the analysts’ low-end target, a business recovery anticipated, and better-than-expected FQ3 results, the odds are high that the downtrend will end. The question is when an uptrend in sentiment will begin, and that won’t be until business reverts to growth and traction is seen in the results.

Price action will likely wallow at or near current lows until business traction is regained, with $19.65 as the critical support target. $19.65 aligns with the low set in December 2022, nearly 24 years ago. A move below it is not expected, but is possible. The likely outcome is a quick price rebound, as indicated by trading volume and institutional trends.

CPB stock market volume has increased as price action approached the critical support level, coincident with ramping institutional activity. Institutions provide strong support, own approximately 50% of the stock, and have accumulated shares quarterly for years. Activity in early 2026 reflects an aggressive $8-to-$1 pace of accumulation; the fiscal Q3 report provided no reason for them to stop.

The primary catalyst this year will be the stabilization of volumes and margins. Volume fell across segments last quarter, with profitability down in both segments. Premium expansion and product innovation will be critical to the company’s success. A new partnership with Buffalo Wild Wings is expected to reinvigorate interest in soup among younger demographics, and premium products, such as Rao’s sauces, should help margins. In the longer term, macroeconomic headwinds are the critical factor, impairing not only consumer choices but volume.

What the market gets wrong about Campbell’s Soup Company is thinking that near-term headwinds will impair the dividend quality. The company’s brand power provides a moat, and its dividend strength has been mispriced. In the current environment, CPB stock can rise on the back of improving sales and economics, or value and yield as the broader economy struggles. Additionally, it's a low-beta stock with the worst already priced in, providing some insulation for potential index volatility as the summer progresses. No matter how you look at it, Campbell’s stock is a win-win for investors.