# Flowers Foods (FLO): Should an 8.4% Yield Be Cut to Zero? > Flowers Foods halved its dividend in May 2026, but at $5.98 the stock still yields about 8.4% after a downgrade to junk. Value investor Colin King argues consumer-goods payers like Flowers should take the dividend to zero and cut leverage to 2 times. We check the debt, the cash flow, who disagrees and the November test. By MCAFax · Published October 20, 2026 Section: Markets & Main Street › From Wall Street · Series: Market Calls, Investigated (https://mcafax.com/notebook/series/market-calls-investigated) Canonical: https://mcafax.com/notebook/flo-flowers-foods-8-4-percent-yield-cut-to-zero-debate Source: MCAFax, The Broker's Notebook (https://mcafax.com/notebook). MCAFax is not a lender or a law firm. --- Flowers Foods (NYSE: FLO), the baker behind Nature's Own and Dave's Killer Bread, halved its dividend in May 2026, yet the stock still yields about 8.4% at $5.98. Special-situations investor Colin King argues that capital-constrained food companies like Flowers should cut even deeper, take the payout to zero and push leverage down to 2 times. The next checkpoint is Flowers' third-quarter report, which data providers expect around November 5, 2026. *This is journalism and commentary, not investment advice. We hold no position unless stated.* ## Key facts - **Ticker and exchange:** Flowers Foods, Inc., FLO, New York Stock Exchange. - **Situation type:** dividend and deleveraging debate at a junk-rated food company. - **The call:** Colin King (@valuedontlie) said on October 14, 2026 that some dividend cutters should cut deeper; a skeptical lean on Flowers' payout policy, with no stated position. - **Price:** $5.98 at the October 19, 2026 close, down 45% from $10.88 at the end of 2025. - **Dividend:** $0.50 a year ($0.125 a quarter) since the May 21, 2026 reset, an 8.4% yield at $5.98. - **Debt:** $1.69 billion of debt and $52.8 million of cash at July 18, 2026, with $399.9 million of the debt classified as current. - **Catalyst:** third-quarter 2026 results, estimated for November 5, 2026 but not yet confirmed by Flowers Foods. - **Main risk:** bread volumes keep shrinking; Flowers Foods' volume fell 5.8% in the second quarter. ## Is Flowers Foods a good bet right now? The case for Flowers Foods is price. At $5.98 and about 212.5 million diluted shares, the equity is worth roughly $1.27 billion, by our math, versus 2026 adjusted EBITDA guidance of $453 million to $481 million. The case against is the trend. Second-quarter sales fell 4.0% to $1.193 billion, adjusted EBITDA fell 19.2% to $111.3 million, and Flowers Foods cut its 2026 adjusted EPS guidance to $0.75 to $0.85, per the [Q2 release](https://investors.flowersfoods.com/news/news-releases/2026/08-20-2026-210545904). ## Why are investors bearish on Flowers Foods? - **Shrinking volume.** Branded Retail volume fell 7.6% in the quarter ended July 18, 2026, offset only partly by 3.8% higher pricing and mix. - **Junk ratings.** S&P Global cut Flowers Foods to BB+ from BBB- in September 2026 with a negative Outlook, and [Moody's](https://www.investing.com/news/stock-market-news/moodys-downgrades-flowers-foods-rating-on-slow-deleveraging-93CH-4898460) assigned a Ba1 corporate family rating on September 11, 2026. - **Leverage is not falling yet.** Moody's put gross debt at 3.6 times EBITDA for the 12 months to July 18, 2026 and expects about 3.7 times by year-end. - **The payout still eats the cash.** At $0.50 on roughly 212 million shares, the dividend costs about $106 million a year, by our math. Moody's projects free cash flow of about $100 million to $125 million in both 2026 and 2027. ## Who's making this call and why? Colin King is a special-situations investor who publishes stock write-ups and a newsletter and posts as @valuedontlie. On October 14, 2026 he [wrote](https://x.com/valuedontlie/status/2110366775808340088) that consumer-goods companies with hefty dividends look capital constrained: "seeing some dividend cuts but some of them should be cutting even deeper." King added that such companies should take the dividend to zero, get leverage to 2 times and revisit payouts after the stock multiplies. The post names no ticker, but its chart shows dividends per share falling to an estimated $0.62 from $0.98, a drop in line with Flowers' May reset. Later that day King [answered "yep"](https://x.com/valuedontlie/status/2110391064775561347) when a reader asked whether a deleveraging chart he posted on October 13 was Flowers Foods. At the $467 million midpoint of EBITDA guidance, 2 times means about $934 million of net debt, versus about $1.63 billion at July 18, 2026, by our math: roughly $700 million to retire. **Track record.** In our tracking, Colin King is 11-8 (a .579 win rate) on 19 calls scored at 180 days against the S&P 500, with an average edge of +35.1 percentage points, ranked 5th on the career table. One outlier drives that average; his median edge is +4.2 points. See the [scoreboard](https://mcafax.com/notebook/market-calls-scoreboard). **Other voices:** - **Wagie Capital (@WagieCapital)**, a pseudonymous long/short commentator, [wrote](https://x.com/WagieCapital/status/2098860871199941089) after the Moody's and S&P downgrades: "Surely they have to cut the dividend again." - **Alan Galecki (@Fin_Eng_Net)**, who writes the Financial-Engineering.net newsletter and sells a paid tier, [argued](https://x.com/Fin_Eng_Net/status/2099811115228164192) that Americans are eating less loaf bread: "Cut to zero looming." ## Who disagrees? - **Management.** In the [Q1 release](https://investors.flowersfoods.com/news/news-releases/2026/05-21-2026-210614432), CEO Ryals McMullian said "we expect dividends to remain an important component of our overall shareholder value proposition." The company targets leverage below 3.0 times. - **A value fund.** [Buyside Digest](https://x.com/buysidedigest/status/2111156099902517540) reported that JB Global Capital bought Flowers Foods at $8.50, added at $6.80 and made it the fund's second-largest position, with a sum-of-the-parts fair value of $13 to $14, the fund's own estimate. The fund described Flowers as "a low-risk category at roughly half of asset value." - **Liquidity is fine for now.** Moody's rates Flowers' liquidity SGL-2, citing a $500 million revolver maturing in February 2030. - **The first cut is working.** Dividends paid fell to $26.6 million in the second quarter from $52.4 million a year earlier, and Flowers Foods repaid a net $70.0 million of debt in the first 28 weeks of 2026. ## What are the key facts to verify? - The [Q2 2026 release](https://investors.flowersfoods.com/news/news-releases/2026/08-20-2026-210545904) for guidance, cash flow and the balance sheet. - The [Q1 2026 release](https://investors.flowersfoods.com/news/news-releases/2026/05-21-2026-210614432) for the dividend reset to $0.50 a year. - The [Moody's action](https://www.investing.com/news/stock-market-news/moodys-downgrades-flowers-foods-rating-on-slow-deleveraging-93CH-4898460) for leverage and free cash flow forecasts. ## What would prove it right or wrong? **Right:** third-quarter volume keeps falling, leverage drifts toward Moody's 3.7 times, S&P follows through on its negative Outlook, or the board cuts the dividend again. **Wrong:** the second-half sales pickup that guidance assumes shows up, leverage moves below 3.0 times with the $0.50 dividend intact, and the 8.4% yield shrinks because the share price rises. *This is journalism and commentary, not investment advice. We hold no position unless stated.* ## Questions readers ask **What does Flowers Foods (FLO) do?** Flowers Foods (NYSE: FLO) is one of the largest US producers of packaged bakery foods, with brands including Nature's Own, Dave's Killer Bread, Canyon Bakehouse, Simple Mills, Wonder and Tastykake. Flowers Foods reported 2025 net sales of $5.3 billion. **What is the call on Flowers Foods' dividend?** Special-situations investor Colin King said on October 14, 2026 that some capital-constrained consumer-goods companies should cut their dividends even deeper, take them to zero and get leverage to 2 times. Flowers Foods already cut its dividend to $0.50 a year in May 2026; King's view is a skeptical lean on that policy, not a stated position. **Who is Colin King and what is his track record?** Colin King is a special-situations investor who publishes stock write-ups and a newsletter and posts on X as @valuedontlie. In our tracking he is 11-8 (a .579 win rate) on 19 calls scored at 180 days against the S&P 500, with an average edge of +35.1 points that is driven by one large winner; his median edge is +4.2 points. **What is Flowers Foods' dividend yield now?** Flowers Foods pays $0.125 a quarter, or $0.50 a year, after resetting the dividend on May 21, 2026. At the October 19, 2026 close of $5.98, that is a yield of about 8.4%. **How much debt does Flowers Foods have?** Flowers Foods had about $1.69 billion of debt and $52.8 million of cash at July 18, 2026, with $399.9 million of the debt classified as current. Moody's put gross debt at 3.6 times EBITDA for the trailing 12 months and expects about 3.7 times by the end of 2026. **Is Flowers Foods a good bet right now?** The case for Flowers Foods is a market value of roughly $1.27 billion against 2026 adjusted EBITDA guidance of $453 million to $481 million. The case against is shrinking bread volume, a 19.2% drop in second-quarter adjusted EBITDA and junk credit ratings; this is not a recommendation either way. **Why was Flowers Foods downgraded to junk?** S&P Global cut Flowers Foods to BB+ from BBB- in September 2026 with a negative Outlook, citing weaker packaged-bread demand. Moody's assigned a Ba1 corporate family rating on September 11, 2026, citing slower-than-expected deleveraging after the Simple Mills acquisition. **Who disagrees with cutting the Flowers Foods dividend to zero?** Flowers Foods management said in May 2026 that it expects dividends to remain an important part of shareholder value. Value fund JB Global Capital, as reported by Buyside Digest, made Flowers Foods its second-largest position and puts fair value at $13 to $14, the fund's own estimate. **When does Flowers Foods report next?** Flowers Foods' third-quarter 2026 results are estimated for November 5, 2026 based on past schedules, but the company has not confirmed the date. Investors will watch volume, leverage and any change to the $0.50 dividend. **What would prove the cut-to-zero view right or wrong?** The view gains support if Flowers Foods' volume keeps falling, leverage rises toward 3.7 times or the board cuts the dividend again. It looks wrong if the second-half sales pickup in guidance appears and leverage falls below 3.0 times with the $0.50 dividend intact.