Tags: hormel | stock | reinvesting | dividends

Hormel: A Tasty Stock for Reinvesting Dividends

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Friday, 05 April 2019 02:22 PM Current | Bio | Archive

The best dividend growth stocks have strong brands, durable competitive advantages, and the ability to grow over time. In addition, they must have a shareholder-friendly management team that is committed to raising dividends each year.

Hormel Foods (HRL) is one of the best DRIP stocks for dividend growth investors. DRIP stands for Dividend Reinvestment Program, which allows shareholders to reinvest their dividends directly into buying new shares of the stock. Hormel is one of a small group of companies that provides a DRIP service at no cost.

Hormel has a large and diversified portfolio of strong brands that lead their categories. In addition, Hormel has increased its dividend for over 50 years in a row. This makes it a top Dividend Aristocrat with a no-fee DRIP.

Feeding Shareholders With Growth

Food stocks are not typically associated with growth. Instead, they are usually known for stable profits and steady growth from year to year. Hormel is certainly consistent, but it has a remarkable long-term track record of impressive growth as well.

Hormel has grown its earnings in 28 out of the past 32 years. This is because of the company’s strong brand portfolio. Hormel owns a number of industry-leading brands, such as Jennie-O, Skippy, Hormel, Spam, and more.

Hormel continued to grow last year. Total sales increased 4% in fiscal 2018. Margin expansion, tax reform, and share repurchases helped fuel 18% adjusted EPS growth for the year. The company’s strong growth in recent years was fueled by strategic acquisitions to gain exposure into new categories.

For example, in 2015 Hormel acquired Applegate Farms for $775 million. This was a transformative acquisition for Hormel, as it gave the company a huge presence in one of the biggest growth areas of the food industry. Applegate produces natural and organic prepared meats, such as deli meat, bacon, and hot dogs. Natural and organic foods are a major catalyst going forward.

Compounding Dividends DRIP by DRIP

Hormel has paid a regular quarterly dividend to shareholders without interruption since 1928, and has increased the dividend each year for 53 years in a row. With such a long history of raising dividends, Hormel is a rare stock. It is a member of the Dividend Aristocrats, a group of S&P 500 Index stocks with 25+ years of dividend increases. Not only that, Hormel is also a Dividend King, an even more exclusive group with 50+ years of dividend growth.

Hormel has a current dividend yield of 2%, which is slightly above the average yield of the S&P 500 Index. In addition, the company is likely to continue raising its dividend in the years ahead, thanks to its earnings growth. With an expected dividend payout ratio of 46% for 2019, Hormel’s dividend is secure, with room for future increases.

Ben Reynolds is CEO of Sure Dividend. Sure Dividend helps individual investors build high quality dividend growth stock portfolios for the long run.

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BenReynolds
The best dividend growth stocks have strong brands, durable competitive advantages, and the ability to grow over time. In addition, they must have a shareholder-friendly management team that is committed to raising dividends each year.Hormel Foods (HRL) is one of the best...
hormel, stock, reinvesting, dividends
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2019-22-05
Friday, 05 April 2019 02:22 PM
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