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Hormel Dividends: Where's The Juice?

May 31, 2023 1:23 PM ETHormel Foods Corporation (HRL)28 Comments


  • Hormel Foods, a consumer staple stock, has faced challenges such as volume declines and pricing struggles, leading to a 26% decline in its stock price from its 52-week high.
  • The company aims to improve its business by increasing meat availability, streamlining its product portfolio, and aligning services with customer needs, while maintaining a healthy balance sheet and growing free cash flow.
  • Hormel Foods can be a suitable addition to a conservative dividend portfolio during periods of subdued inflation and healthy consumer sentiment, with potential investors considering starting small and averaging down.
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David McNew


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Comments (28)

thirdcamper profile picture
I don't get why HRL is up 4% today with a significant revenue miss. Clues?
Ian Bezek profile picture
@thirdcamper Expectations were through the floorboards so even a so-so quarter was well ahead of what people were bracing for.
thirdcamper profile picture
@Ian Bezek Sounds about right, but since I still thought it overvalued and needing to come down a little more before being buyable, and since the business is clearly weakening, it surprises me.
Ian Bezek profile picture
@thirdcamper Gross margins will snap back up. Hormel already pushed through price hikes and now commodity prices are plunging. Look at inputs like wheat. Livestock prices will plunge soon too now with grain down so much. Normal pre-pandemic margins on Hormel's new larger revenue base and we're earning $2.25/share+ $50 stock on a low 20s PE, potentially closer to $60 with a little more favorable market for staples.
purpleboarder profile picture
Thanks for the article. I've found that when HRL's dividend is above 2.5%, it is fairly valued to undervalued. I initiated my position in June-Sept of 2017, for around $33 a share. Since the start of 2018, my dividend payments are up 44% via DRIP...

- Long HRL, TSN
Rank Amature profile picture
I personally love this company's products and I have been DRIPing it for the past 5 years. Fully expect to continue owning this well into retirement which is approximately 10 years away. It is just a nice, steady performer.
ValueVole profile picture
Since FY2015, FCF growth has basically been non-existent, same for earnings. Meanwhile the dividend raises kept rolling in. There’s no more room for large increases and I am expecting a few years of low single digit dividend raises on a percentage basis while the company pursues some type of earnings and FCF growth.

HRL is a good company, but over priced for the growth they have delivered for the last 8-10 years. If the yield gets up to 3.5% then I might be interested in adding. Long HRL at <1% of my portfolio.
Yonakit profile picture
Nice article. This is sound advice, “Potential investors may consider starting small and averaging down, as there may be more room for the stock price to fall.”

HRL is our largest LT holding and it’s reached the price where I’m wondering whether to add. It’s tempting. But then I wonder if it’s best to turn toward I-bonds or CDs.

Side comment: I would be a fan of buybacks (at least enough to outpace dilution).
Ian Bezek profile picture
@Yonakit Significant buybacks are unlikely due to the Hormel Charitable Foundation which wants to maintain a steady ownership position in Hormel.
Et20 profile picture
Sell side volume is weak on high timeframes which suggests to me the down side will be limited. We shall see.
Et20 profile picture
well well, up 6% post announcement, what did I say.

I expect the price to stay in current range for a bit befoe deciding on the next move
Think. Focus. Health. Wealth profile picture
Since 2018, chocolate has prevailed over spam

HRL HSY Growth of $10,000.00
With Dividends Reinvested

Start date: 01/02/2018 01/02/2018
End date: 05/30/2023 05/30/2023
Start price/share: $36.36 $112.11
End price/share: $38.33 $256.37
Starting shares: 275.03 89.20
Ending shares: 308.86 100.34
Dividends reinvested/share: $5.09 $18.26
Total return: 18.39% 157.25%
>>Average Annual Total Return: 3.17% 19.10%
Starting investment: $10,000.00 $10,000.00
>>Ending investment: $11,837.58 $25,724.06
Years: 5.41 5.41

>Life is short, eat dessert 1st!
Yonakit profile picture
@Think. Focus. Health. Wealth To be fair, HSY was rangebound about 5 years, 2013-2018. The Golden Monkey years were rough.
Ian Bezek profile picture
@Think. Focus. Health. Wealth Can own both. I do. Was buying HSY heavily in 2017. Now's the time for Hormel.
AnimeSnoopy profile picture
Agree totally with you.
I will hold off on adding $HRL exposure, if I have to bet, Q1 will disappoint those short-sighted folks not willing to sit through a rough patch in this market segment.

Add on temporary headwinds (as with $TSN) should they arise, like you mentioned.
AlexChilton profile picture

First rate write up. Pulling some things out:

'The stock price is back where it was in early 2016.'
'the valuation is fair, not undervalued'
'maintains an extremely healthy balance sheet'

Won't quote the real meat of the article, but the quips here reinforce why HRL is bought monthly in my portfolio, since '08. Again, thanks.

Leo Nelissen profile picture
@AlexChilton Alex, it's always a pleasure to read your comment! I appreciate that you read my articles so thoroughly!
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