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This is Why Hormel Foods (HRL) is a Great Dividend Stock
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Hormel Foods in Focus
Hormel Foods (HRL - Free Report) is headquartered in Austin, and is in the Consumer Staples sector. The stock has seen a price change of 0.55% since the start of the year. The maker of Spam canned ham, Dinty Moore stew and other foods is paying out a dividend of $0.26 per share at the moment, with a dividend yield of 2.12% compared to the Food - Meat Products industry's yield of 0.47% and the S&P 500's yield of 1.31%.
Looking at dividend growth, the company's current annualized dividend of $1.04 is up 6.1% from last year. Hormel Foods has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 10.61%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Hormel's current payout ratio is 57%. This means it paid out 57% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, HRL expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $1.97 per share, representing a year-over-year earnings growth rate of 13.87%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HRL is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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This is Why Hormel Foods (HRL) is a Great Dividend Stock
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Hormel Foods in Focus
Hormel Foods (HRL - Free Report) is headquartered in Austin, and is in the Consumer Staples sector. The stock has seen a price change of 0.55% since the start of the year. The maker of Spam canned ham, Dinty Moore stew and other foods is paying out a dividend of $0.26 per share at the moment, with a dividend yield of 2.12% compared to the Food - Meat Products industry's yield of 0.47% and the S&P 500's yield of 1.31%.
Looking at dividend growth, the company's current annualized dividend of $1.04 is up 6.1% from last year. Hormel Foods has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 10.61%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Hormel's current payout ratio is 57%. This means it paid out 57% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, HRL expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $1.97 per share, representing a year-over-year earnings growth rate of 13.87%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HRL is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).