When I think of passive-income stocks, I picture businesses that are boring and slow. Utilities. REITs. Assets that offer investors appealing yields, but little else.
Mondelēz International (NASDAQ: MDLZ) is a different kind of income play, and I think it’s one of the most misunderstood stocks in the consumer goods space right now.
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Before getting into the investment case, it helps to understand the company’s actual footprint, because it’s bigger and stranger than most people realize. Mondelēz International holds 17% of the $128 billion global biscuit market, a segment that includes cookies. Its Oreo brand, for example, holds an 18% market share of the biscuit category in China — the highest country-level biscuit share Oreo has worldwide.
The company also holds 12.4% of the $147 billion global chocolate market and 8.6% of the $20 billion snack bar market. It operates in more than 150 countries. When its CEO says 40% of 2025 revenues came from emerging markets, and that its sales in those markets have grown at a 13.4% compound annual rate over the past five years, that’s proof the machine is already running.
In 2025, cocoa prices hit historic highs, and Mondelēz took the brunt of it. The company said the unprecedented inflation could cut into its adjusted EPS by as much as 15%. The stock has been punished. Since last summer, shares have fallen from a high above $70 to a 52-week low of around $51 in January, and today trade at roughly $59. That slide has pushed its trailing dividend yield to around 3.3%.
But here’s what the bears behind sell-off are missing: Cocoa spot prices have already come down significantly from their 2024 peak. The problem is that large manufacturers like Mondelēz hedge their commodity exposure roughly a year in advance, which in this case has locked them into elevated prices even as the spot market for cocoa has cooled.
The company is not expected to benefit from the declining cocoa costs until 2027. This creates a window for the company to adjust. The market is pricing in the current pain, but the structural relief is already in the pipeline.
In a recent interview with Food Dive, CEO Dirk Van de Put said Mondelēz is already seeing some “small benefits” from declining cocoa prices, and said it plans to increase advertising and brand investment in 2026. That’s a company leaning into its position, not retreating from it.
The bull case for Mondelēz is really an emerging-market case, and it takes a long view.
Currently, China generates roughly $2 billion in annual revenue for the company. Brazil contributes $1.8 billion and India $1.7 billion. And its sales in all three are growing faster than the company’s developed market businesses. Its strategy in India, for example, centers on expanding route-to-market reach, scaling biscuit premiumization through Oreo and Biscoff, and building out a chocolate business in a country where per-capita chocolate consumption is still a fraction of what it is in Europe.
Mondelēz has also been methodically shrinking its share count over time. The company has reduced its diluted share count through consistent annual repurchases. On top of this, the company is steadily returning money to shareholders, with dividends rising in 2025. At the same time, its share count declined from 1.36 billion to 1.28 billion, signaling ongoing stock buybacks that enhance per-share value.
In December 2024, the board authorized a new $9 billion repurchase program running through December 2027, replacing the prior $6 billion authorization, of which $2.8 billion had gone unspent. Fewer shares outstanding means each remaining share captures a larger slice of future earnings. That math works quietly in investors’ favor regardless of what cocoa prices are doing in any given quarter. And $9 billion would be a meaningful buyback for a company currently valued at around $82.5 billion.
Mondelēz pays a quarterly dividend of $0.50 per share and has raised its payouts every year for over a decade, with a five-year dividend growth rate of nearly 9.5%. At current prices near $59, its forward yield sits around 3.4%.
The payout ratio is expected to exceed 100% of earnings in the near term. This is a legitimate risk that income investors shouldn’t ignore. But free cash flow coverage is healthier at 77%, and the company has guided for over $3 billion in free cash flow in 2026.
With all this in mind, Mondelēz is not the stock to buy if you need yield stability in 2026. The cocoa price headwinds it faces are real, and the near-term earnings picture is murky.
But if you’re deploying $1,000 with a time horizon of three to five years or more, there’s a case to be made for buying this globally diversified snacking business with dominant brands, a growing emerging market engine, and a well-funded dividend, particularly when you can get it at a share price that reflects a temporary commodity-related problem rather than a permanent structural one. That’s the kind of setup that positions a stock for real passive income growth over time.
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Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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