Food maker and distributor Kraft Heinz Co. (NASDAQ: KHC) was downgraded to a junk rating. It is among the largest companies in its industry. It is also the most troubled. Research firm Fitch downgraded it to BB+ from BBB-. The company has brutally beat up investors as its shares have fallen from a 52-week high of $48.66 to $26.46.

Fitch commented:

The downgrade reflects Fitch’s view that Kraft’s leverage will remain elevated above 4x for a prolonged period due to ongoing EBITDA challenges and limited near term debt reduction potential.

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Put another way, it will need to increase earnings or dump debt to keep its dividend intact. With its current dividend of $1.60, its yield is an extraordinarily high 5.5%. It is one of the few things that makes the shares attractive.

As Kraft Heinz reported earnings, it became clear that its turnaround plans are a mess. Revenue was below expectations.

Fourth-quarter numbers included a drop in revenue of 5.1% to $6.5 billion. EBITA fell 14.3% to $0.72 per share. Kraft Heinz CEO Miguel Patricio said, “While our 2019 results were disappointing, we closed the year with performance consistent with our expectations, and driven by factors we anticipated.” It is a shame the expectations were so low. He promised this year would be better. Apparently, shareholders did not agree.

The company did affirm its dividend, but that was about all.

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