Mondelez International - The New Bank Interest Investment

For investors seeking a safer haven, Mondelez International (MDLZ) has some issues. First and foremost, the pandemic inflationary period that generated higher revenue growth is over.

This is important because as the company's revenue accelerated during the pandemic, its operating cash flow margin has contracted by about 330 basis points since 2019. This means that MDLZ was unable to maximize this revenue growth directly. For example, nominal operating cash flow only increased by 2% annually, while capex grew at more than double this rate. As a result, free cash flow was down 7% since 2019.

At the same time, MDLZ stock buybacks and dividends paid have increased 61% since 2019 with the split between the two being nearly 50-50 totaling just below $5 billion as of 2025. As in the past, MDLZ has increased debt to finance its share buybacks and dividends paid with total debt now above $21 billion, about $8.5 billion greater than the company's property and equipment and cash and cash equivalents. MDLZ is overextended on debt and if the company wishes to reduce its shares outstanding and grow its dividends, the current cash flow margin is not capable of sustaining this.

The other issue with MDLZ is that since 2019, the company's stock price performance has been dead money. During this period, MDLZ has averaged a dividend yield of around 2.5%. Essentially, investors with a long-term position in MDLZ are only benefitting from the dividend payout and MDLZ has become a de facto bank interest investment. Unlike a bank account, MDLZ stock is not backed by the U.S. government. Conservative investors may scoff at severe financial distress risks based on MDLZ's history of products and longevity, but MDLZ stock is subject to major volatility like any other stock.

Investors need to monitor the changing financial landscape with respect to digital assets and blockchain, notably regarding USDC legislation with respect to yields. Companies like MDLZ represent the new bank interest investment where many investors have flocked to as bank interest rates have approached near-zero. These types of companies may end up carrying much more risk than simply taking yields elsewhere over time.