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Hormel Foods (HRL) Rewards Shareholders With Dividend Hike

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·3 min read
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  • HRL
  • MKC-V
  • HSY

Hormel Foods Corporation HRL is focused on enhancing shareholders’ returns. The global branded food company announced an annual dividend hike of 6%. The recent hike takes Hormel Foods’ annual dividend to $1.04 per share from 98 cents per share paid earlier. This marks the company’s 56th consecutive annual dividend increase.

Hormel Foods will payout a quarterly dividend of 26 cents per share on Feb 15, 2022 to shareholders on record as of Jan 18. This will mark the company’s 374th consecutive quarterly dividend since 1928.

Hormel Foods currently has a dividend payout of 59%, a dividend yield of 2.3% and a free cash flow yield of 1.7%. Dividend payouts are one of the biggest enticements for investors and the Zacks Rank #3 (Hold) company is committed to boosting shareholders’ value.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

What Else Should You Know

Hormel Foods has been strengthening its business on the back of strategic acquisitions. On Jun 7, 2021, the company acquired the Planters snacking portfolio from The Kraft Heinz Company. The buyout includes the Planters, NUT-rition, Planters Cheez Balls and Corn Nuts brands along with three manufacturing units. Prior to this, the company acquired Texas-based pit-smoked meats company Sadler's Smokehouse in March 2020. The buyout is in sync with Hormel Foods’ initiatives to strengthen its position in the foodservice space.

Several other companies in the food space have been benefiting from strategic acquisitions like Post Holdings, Inc. POST, McCormick & Company, Incorporated MKC and The Hershey Company HSY. In fourth-quarter fiscal 2021, Post Holdings’ top line included $99.8 million in net sales from acquisitions made through fiscal 2021. The buyouts include Private label ready-to-eat (PL RTE) cereal business, Egg Beaters liquid egg brand, Almark Foods business and related assets and Peter Pan nut butter brand.

McCormick has strategically increased its presence through acquisitions to strengthen portfolio. In December 2020, McCormick announced that it had bought a 100% stake in FONA International, LLC and some of its affiliates to expand the flavor solutions segment. In November 2020, MKC acquired the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand — to accelerate growth in the condiment platform.

Hershey entered into a definitive agreement to acquire Dot’s Pretzels LLC. The addition of Dot’s Pretzels is in sync with the company’s initiative to boost the salty snacking portfolio. The company also announced its plans of acquiring Pretzels Inc. from an affiliate of Peak Rock Capital. The acquisition will further expand Hershey’s snacking and production capabilities. Management envisions concluding the transactions by the end of 2021.

Shares of HRL have dropped 5.2% in the past three months compared with the industry’s decline of 4.7%. POST and MKC have declined 8% and 1.3%, respectively, during this time. HSY moved up 2.8% in the past three months.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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