Hormel Foods Corp (HRL) Dividend Stock Analysis

Hormel Foods Corp (NYSE:HRL) produces and markets various meat and food products worldwide. The company operates in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and International & Other.

The company is a dividend king which has managed to increase annual dividends for 51 years in a row. There are only twenty dividend kings in the world, which have each managed to boost annual dividends every single year for at least half a century.

Hormel’s last dividend increase was in November 2016 when the Board of Directors approved a 17.20% increase (1) in the quarterly distribution to 17 cents/share.

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Hormel’s largest competitors include Tyson Foods, Inc. (NYSE:TSN), Conagra Brands Inc (NYSE:CAG), General Mills, Inc. (NYSE:GIS), Campbell Soup Company (NYSE:CPB) and J M Smucker Co (NYSE:SJM).

Over the past decade this dividend growth stock has delivered an annualized total return of 16.10% to its shareholders.

The company has managed to an impressive increase in annual EPS growth since 2006. Earnings per share have risen by 12.30% per year. Analysts expect Hormel Foods Corp (NYSE:HRL) to earn $1.71 per share in 2017 and $1.77 per share in 2018. In comparison Hormel earned $1.64/share in 2016.

The company has stable and growing earnings and dividends and a strong balance sheet. There is a stable demand for food products from customers, who tend to stick to brands they know. This leads them to make repeatable purchases over times. The company offers a diverse line of products in a variety of categories through its various segments such as refrigerated foods, grocery products, branded and unbranded turkey products, specialty foods and international segment.

Future growth in earnings per share can be generated by strategic acquisitions, as well as expanding international presence. Recent acquisitions include Justin LLC, which was a producer of snacks, as well as Applegate Farms, which was a natural and organic value added meat manufacturer.

The annual dividend payment has increased by 15.30% per year over the past decade, which is higher than the growth in EPS. The expansion in the dividend payout ratio allowed the company to raise distributions at a rate that is higher than earnings.