Hormel Foods Corporation

🇺🇸New York Stock Exchange
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Hormel Foods Corporation stock analysis HRL overview
Bullish +75

3 Reasons This Is the Best Dividend Stock to Buy in May

🏭 Hormel Foods (NYSE: HRL) is celebrated as one of the best dividend stocks, having increased its dividend payout for 59 consecutive years to earn "Dividend King" status.

🥩 As the maker of iconic brands like Spam, Skippy, and Jennie-O, the company has been a staple in American kitchens since it became a public company in 1928.

💹 The stock currently offers a high dividend yield of 5.6%, driven by a share price that is down 13% year-to-date and 29% over the past 12 months.

⚠️ While high yields can sometimes signal trouble, Hormel's consistent track record and recent quarterly increases in sales, earnings, and cash flows suggest the streak will likely continue.

🔄 The company launched its "Transform and Modernize" plan in 2024 to streamline expenses, sell underperforming assets, and improve supply chain efficiency.

🎯 Management is guiding for operating income to increase by $250 million in 2026, reaching between $1.06 billion and $1.12 billion, up from $719 million the prior year.

🚀 Analysts are bullish on the turnaround plan, with a median price target of $27 per share implying approximately 31% upside over the next year.

💼 Investors benefit from Hormel's dividend reinvestment plan (DRIP), which allows them to grow their holdings without incurring brokerage fees.

📉 The stock is trading at attractive valuations, with a forward P/E ratio of 14 and a price-to-sales ratio of 0.95, representing its cheapest levels in over a year.

🛑 Despite being recommended by this article as a top dividend pick, Hormel Foods was notably excluded from the Motley Fool Stock Advisor's list of 10 best stocks to buy now.

📈 The article references the historical success of Stock Advisor with hypothetical examples, noting Netflix's return multiplier since 2004 and Nvidia's since 2005.

🏆 Stock Advisor reports an average total return of 981%, significantly outperforming the S&P 500's average return of 205% over their history.

📊 The article advises investors to consider Stock Advisor's latest top 10 list as an alternative, which is available with a subscription.

👥 Dave Kovaleski and The Motley Fool both disclose they hold no position in any of the stocks mentioned in the report.

⚖️ The text maintains a neutral disclosure policy, stating clearly that the authors have no financial interest in the specific companies discussed.

📅 The hypothetical return figures referenced in the article are marked with an asterisk indicating they are as of May 8, 2026.

Bullish Signals
  • HRL is a 'Dividend King' with a 59-year streak of consecutive dividend increases, demonstrating exceptional consistency and shareholder commitment.
  • Hormel offers an attractive 5.6% current dividend yield among non-REIT and BDC stocks, providing strong income potential for investors.
  • The company's Transform and Modernize plan launched in 2024 aims to increase operating income by $250 million by 2026, signaling a clear path to growth.
  • Hormel is guiding for operating income between $1.06 billion and $1.12 billion in fiscal 2026, up from $719 million last year, validating its turnaround strategy.
  • Analysts are bullish on the stock with a median price target of $27 per share, implying approximately 31% upside potential over the next year.
  • Hormel stock is trading at an attractive valuation with a forward P/E ratio of 14 and a price-to-sales ratio of 0.95, which is the lowest in over a year.
  • The company has recently demonstrated positive momentum with sales, earnings, and cash flows all increasing in the last fiscal quarter.
Risk Factors
  • Stock price is down 13% year to date and 29% over the past 12 months, suggesting a potentially concerning trend.
  • A high dividend yield of 5.6% can indicate a 'dividend trap' where the tanking stock price suggests the company might be in trouble and could cut its dividend.
  • Hormel Foods was not included in The Motley Fool Stock Advisor's top 10 list of best stocks to buy now, implying it may underperform compared to other recommended alternatives.
  • Analysts have a median price target of $27 per share; if this target is achieved, the current high dividend yield will likely fall, reducing income for investors.
Full Analysis
The article presents Hormel Foods (NYSE: HRL) as a top dividend investment opportunity, highlighting its status as a "Dividend King" with 59 consecutive years of dividend increases and a current yield of 5.6%. The analysis notes that the higher-than-average yield is partly driven by a stock price decline of 13% year-to-date and 29% over the last 12 months, which management attributes to value rather than fundamental weakness, citing strong recent sales, earnings, and cash flows. Central to the investment case is Hormel's "Transform and Modernize" plan launched in 2024, aimed at streamlining operations, divesting underperforming assets, and optimizing the supply chain. Management has set a specific target to increase operating income by $250 million by fiscal 2026, guiding for between $1.06 billion and $1.12 billion in revenue from this line item compared to the prior year's $719 million. Analysts are bullish on this turnaround strategy, with a median price target of $27 per share representing approximately 31% potential upside. The piece also evaluates valuation metrics, noting a forward P/E ratio of 14 and a price-to-sales ratio of 0.95, suggesting the stock is trading at attractive levels relative to historical ranges and peer expectations. Additionally, Hormel offers shareholders the benefit of dividend reinvestment without brokerage fees, which can enhance total return over time despite potential yield compression if the stock price appreciates to meet analyst targets.