Dividend Aristocrat Overview: Hormel Foods

About Hormel Foods

Hormel Foods has been growing their dividends since 1967. Photo courtesy theimpulsivebuy via flickr.com

Minnesota-based Hormel Foods has paid dividends since 1928 and has been growing them since 1967.
Photo courtesy theimpulsivebuy via flickr.com

In 1891, George Hormel founded Geo. A. Hormel & Co. in Austin, MN to sell fresh pork products across Minnesota.  In the early 1900s, the company grew outside of Minnesota, expanding with offices in Illinois, Texas and Georgia and a new manufacturing plant in California.  In 1928, Geo. A. Hormel went public and immediately began paying dividends, a record which has continued to this day.  Hormel continued to expand and brought to market new products, including the ubiquitous Spam in 1937.  The company officially changed its name to Hormel Foods in 1993.

Hormel’s brands comprise a wide variety of food products including Skippy®, Dinty Moore®, Chi-Chi’s®, and Wholly Guacamole®.  Hormel earned $526 million on $8.7 billion in fiscal year 2013.

The company is a member of the S&P 500 index and trades under the ticker symbol HRL.

Hormel Foods’ Dividend and Stock Split History

Hormel has been a Dividend Aristocrat since 1991 and in 2014 increased its dividend for the 48th consecutive year.  Also, Hormel has paid out quarterly dividends continuously since 1928.  Hormel has traditionally increased dividends in the 1st quarter of the calendar year and most recently increased its quarterly dividend at the beginning of 2014 by 3 cents per share or 17.65%, to 20 cents per share from 17 cents per share; I expect the company to announce its next dividend increase in December 2014, with the first increased dividend paid out in February 2015.

Hormel Foods is one of only a few dividend growth stocks that has doubled its dividend payout over the last five years.  The compounded dividend growth rate over that time has been 16.05%.

Hormel Foods is one of only a few dividend growth stocks that has doubled its dividend payout over the last five years. The company’s compounded dividend growth rate from 2009 – 2014 has been 16.05%.

Hormel has an excellent dividend growth history and is one of the few Dividend Aristocrats that has doubled its dividend payout from 2009 to 2014.  The company is on track to pay out 80 cents per share in 2014, up from a split-adjusted 38 cents per share in 2009, resulting in a 5-year compounded annual dividend growth rate (CADGR) of 16.05%.  This most recent history of rapid dividend growth exceeds the longer term rate, with Hormel having produced 10 and 20-year CADGRs of 13.52% and 9.73%, respectively.  Over the last 25 years, Hormel has increased their dividend payouts at an annualized rate of 11.31%.

Hormel Foods became a public company in 1928.  Since then, the company has split its stock 2 for 1 nine times, most recently in February 2011.  Before 2011, 2 for 1 stock splits occurred in January 1960, February 1968, November 1971, January 1980, August 1985, April 1987, January 1990 and January 2000.  Hormel also paid out 10% stock dividend twice early in its history as a public company, in January 1949 and January 1957.  One share purchased when the company went public in 1928 would now have split into 619.5 shares.  More recently, 100 shares purchased in 1991 when the stock had already increased dividends for 25 consecutive years would have split into 400 shares by 2014.  While not a large split factor, those initial 100 shares, which paid a total of $30 in 1991 by 2014 paid a total of $320, not including reinvested dividends.

Hormel Foods’ Direct Purchase and Dividend Reinvestment Plans

Hormel has both direct purchase and dividend reinvestment plans.  However, interested investors must already be owners of Hormel stock.  Investors who do not currently own stock can purchase at least one share through their broker and submit the share certificate to Wells Fargo Shareholder Services, which is Hormel’s transfer agent for the plans.

Participants are able to purchase additional shares directly through the plans and reinvest all dividends to purchase additional shares of Hormel stock.  Partial reinvestment of dividends is not permitted.  The minimum investment amount for direct purchases is $25.

Hormel pays all fees associated with purchases whether through a direct cash investment or through the reinvestment of dividends.  When selling shares, investors will pay a sales fee of between $15 and $30, depending on how an investor requests the sale be executed (batch order, market order, limit order, or stop order), plus a 12 cent per share trading commission.  Other fees may apply, so review the Plan Brochure at the Wells Fargo Shareholder Services website.

Helpful Links

Hormel Foods Investor Relations Website

Current quote and financial summary for Hormel Foods (finviz.com)

Information on the direct purchase and dividend reinvestment plans for Hormel Foods