May 02, 2025 a 07:31 am
HRL: Dividend Analysis - Hormel Foods Corporation
Hormel Foods Corporation exhibits a compelling dividend profile, boasting a substantial history of 41 years of consistent dividends without a cut. The company's stable dividend yield of approximately 3.75% positions it as an attractive option for income-focused investors. Despite a relatively high EPS payout ratio, Hormel maintains a healthy financial posture conducive to long-term equity sustainability.
📊 Overview
Hormel Foods Corporation operates in the sector of Consumer Defensive, offering a reliable dividend yield of 3.75%. Over a robust dividend history spanning 41 years, the company has never recorded a cut or suspension, underscoring its commitment to shareholder returns.
| Sector | Dividend Yield (%) | Current Dividend Per Share (USD) | Dividend History (Years) | Last Cut/Suspension |
|---|---|---|---|---|
| Consumer Defensive | 3.75% | 1.12 | 41 | None |
🗣️ Dividend History
Understanding dividend history is crucial as it reflects a company's commitment and ability to return value to shareholders. Here we see Hormel Foods' steadfast dividend track record.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 0.58 |
| 2024 | 1.13 |
| 2023 | 1.10 |
| 2022 | 1.04 |
| 2021 | 0.98 |
📈 Dividend Growth
Dividend growth is integral for investments to outpace inflation. Hormel Foods has maintained moderate growth in dividends over recent years.
| Time | Growth |
|---|---|
| 3 years | 4.86% |
| 5 years | 6.11% |
The average dividend growth is 6.11% over 5 years. This shows moderate but steady dividend growth.
✅ Payout Ratio
The payout ratio is a critical indicator of sustainability, reflecting the proportion of earnings distributed as dividends. Hormel's ratios show careful management between rewarding shareholders and retaining capital for growth.
| Key Figure | Ratio |
|---|---|
| EPS-based | 81.46% |
| Free cash flow-based | 69.28% |
A payout ratio of 81.46% (EPS) and 69.28% (FCF) suggests that Hormel is distributing a significant portion of its profits as dividends while maintaining a buffer to support future growth and resilience.
📈 Cashflow & Capital Efficiency
Evaluating cash flows and capital efficiency provides insights into a company’s operational effectiveness and financial health.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 5.96% | 4.44% | 3.39% |
| Earnings Yield | 4.75% | 4.53% | 3.95% |
| CAPEX to Operating Cash Flow | 20.24% | 25.79% | 24.47% |
| Stock-based Compensation to Revenue | 0.19% | 0.20% | 0.20% |
| Free Cash Flow / Operating Cash Flow Ratio | 79.76% | 74.21% | 75.53% |
Hormel exhibits strong cash flow stability and capital efficiency, with favorable margins indicating sustainable capital allocation and effective operational management.
📈 Balance Sheet & Leverage Analysis
Analyzing the balance sheet and leverage metrics helps evaluate financial stability and the company's ability to withstand economic downturns.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.36 | 0.43 | 0.44 |
| Debt-to-Assets | 0.21 | 0.25 | 0.25 |
| Debt-to-Capital | 0.26 | 0.30 | 0.30 |
| Net Debt to EBITDA | 1.54 | 1.92 | 1.47 |
| Current Ratio | 2.32 | 1.43 | 2.47 |
| Quick Ratio | 1.19 | 0.70 | 1.30 |
| Financial Leverage | 1.68 | 1.74 | 1.77 |
Hormel maintains a strong balance sheet with manageable leverage ratios, indicating prudent financial management and creditworthiness.
📉 Fundamental Strength & Profitability
Fundamental performance indicators provide insights into profitability and operational efficiency, critical for long-term value creation.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 10.07% | 10.26% | 13.27% |
| Return on Assets | 5.99% | 5.90% | 7.51% |
| Net Margin | 6.75% | 6.55% | 8.03% |
| EBIT Margin | 9.36% | 8.98% | 10.76% |
| EBITDA Margin | 11.53% | 11.07% | 12.65% |
| Gross Margin | 16.96% | 16.51% | 17.37% |
| R&D to Revenue | 0% | 0% | 0% |
Hormel Foods demonstrates robust profitability metrics, signaling strong operational effectiveness and the ability to deliver shareholder value consistently.
📈 Price Development
✅ Dividend Scoring System
| Criteria | Score | |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 5 | |
| Dividend growth | 3 | |
| Payout ratio | 3 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 4 |
Final Score: 32/40
🌟 Rating
Overall, Hormel Foods Corporation presents itself as a financially sound and reliable dividend-paying entity. The company's extensive history of consistent dividend payments, alongside manageable payout ratios and healthy financial metrics, makes it a strong candidate for sustainable income-focused portfolios. The recommendation is to consider Hormel as a buy for income-seeking investors looking to secure steady returns over time.