Quarterly Earnings: Eastman Kodak and Kellogg

Well, I was wrong to be bearish. The one-year chart shows that shares of Kodak have moved higher since January. And I was criticized for not recognizing the value of the restructuring; obviously, many investors out there believe it will eventually bear fruit.

Then comes yesterday's negative price action. It was instigated by a miss: according to Reuters, the adjusted Q1 profit of 82 cents per share was 8 cents short of Wall Street's predictions. That was just too much for traders; they pummeled the stock with their sell orders and made it a generally nasty day to be in the photography entity.

Kodak will probably bounce back from the sell-off, but I'm still avoiding the stock. Sure, management is confident that better times are ahead. And companies that attempt to regain past glories often do succeed, making loyal shareholders a lot of money in the process. I guess I just see better risk/reward scenarios out there. I'll perhaps change my opinion on Kodak one of these days, but for now, I don't believe it is either fundamentally or technically attractive enough for my portfolio.

Okay, let's move along to a less scary stock. How does Kellogg (K) sound to you? If you're in the market for a sensible long-term idea, then this is a company you should check out. The cereal maker, whose colleagues include General Mills (GIS) and Kraft (KFT), closed higher yesterday by 4.6%, and it was very close to the 52-week high of $55.45. The Q1 results were solid.

Net income was $1.09 per diluted share, a figure that represents 30% appreciation (a slightly lower growth rate of 27% is observed once adjustments are made for currency effects); expectations were for 94 cents per share. Operational cash flow remained steady at $250 million. Execs are confident in future cash flows: they announced a $2.5 billion repurchase initiative that will hopefully be executed over the next couple years.

Kellogg may be near the high end of its range, but at a 2.7% dividend yield (based on Thursday's closing price), I think one could argue it isn't exorbitantly priced. Sure, I would rather get in at a dividend yield of over 3%, but that can't always happen. Investors can simply add to the position to improve the cost basis over time and enjoy an increasing effective yield. The board should most likely continue to raise the dividend payout in the years ahead.

Bottom line: It's Kellogg over Kodak as far as I'm concerned. I know that Kodak could experience more robust capital appreciation if things go its way, but the dividend-paying Kellogg is more my style.

Disclosure: I don't own any company mentioned; positions can change without notice.