Lance (LNCE): Snack on this Dividend

It is hard to believe that a major listed company was started with capital of just $60, but that is the exact amount that Phillip Lance used to start snack food giant Lance Inc. (LNCE) in 1913.

The company, which started out offering roasted peanuts and hand-packed peanut butter spread on crackers, has since expanded to cookies, potato chips, crackers, sugar wafers, nuts, restaurant style crackers and other products through North Carolina, Iowa, Georgia, Massachusetts, Texas, Florida, Ohio, and Ontario and Canada.

Trading on a dividend yield of around 3%, the company has paid a dividend every year since 1972. This includes special dividends declared in nine of those years.

Reporting second quarter results in July, the company showed that the snack food industry had proven resilient delivering net revenue of $235.4 million, flat on the $236.4 million delivered in the corresponding 2009 quarter. Solid sales, focused expense control and continuing efficiency gains drove these results, which were outstanding given the economic situation.

The first quarter of the year was disappointing, but the company is certainly back on track to achieve its earnings targets and deliver results.

Lance (LNCE) has also been good at developing strong cash flows through its business. Despite the global financial crisis the group grew its cash from operations to $22 million in the last quarter. Cash flows from operations for the full 2009 year came in at $69 million, which represents a price to cash flow of around 10 times.

Prospects for the company look good going forward as the firm in the throngs of completing a merger with competitor Snyder which they announced in July. Snyder is a privately held company that is the largest manufacturer of pretzels in the United States.

The merger allows Lance (LNCE) to create a stronger company that creates value for shareholders with a broad line of leading snack food brands supported by a strong national Distribution system. The combined company will be called Snyder's-Lance, Inc.

While Lance (LNCE) doesn't have the same market-leading appeal as some of its more illustrious food manufacturing competitors, such as Pepsico (PEP) or Kraft (KFT) the company has shown an innovative approach to growth and a willingness to return money to shareholders over the past several decades.