Hormel Yields 5.5% After a 40% Stock Decline. Is Its Dividend Safe?
Hormel has raised its dividend for 60 straight years, but shrinking raises, a stock that lost nearly 40% of its value, and a payout that once outpaced free cash flow put the next increase in question.
Shares of Hormel Foods (NYSE:HRL | HRL Price Prediction) closed at $21.28 on October 30. At that price, its $1.17 annualized dividend yields about 5.5%. Part of that yield comes from a stock that has lost 39.82% over five years. Hormel declared last year’s raise on November 24, 2025, so the next decision is only weeks away. Income investors need to know whether the payout can keep growing.
A 60-Year Streak That Checks Out
When Hormel reported fourth-quarter fiscal 2025 results, Jeff Ettinger, then the company’s interim chief executive, noted the milestone:
“Demonstrating our long-standing commitment to shareholder returns, we recently announced a 1% increase in our quarterly dividend, raising the annualized rate to $1.17 per share. This marks an impressive milestone: 60 years of uninterrupted dividend increases at Hormel Foods, a legacy we’re extremely proud of.”
The payment record confirms the run. The quarterly dividend went from $0.245 in 2021 to $0.26 in 2022, $0.275 in 2023, $0.2825 in 2024, $0.29 in 2025, and $0.2925 in 2026. The raises are getting smaller, though. The most recent one was only 1%. Six decades of continuous raises still puts Hormel in a very small club, and we ranked ten Dividend Kings by valuation in a free report here.
Coverage Is Tight but Holding
Hormel guides fiscal 2026 adjusted EPS to $1.45 to $1.51, which means the dividend uses roughly 77% to 81% of adjusted earnings. On a GAAP basis, guidance of $1.06 to $1.12 falls below the payout. One-time charges explain the gap: a $56M loss on the Brazil sale, a $48.22M Indonesia impairment, and a $37.50M antitrust settlement.
Cash flow tells a stronger story. Over the last four reported quarters, operating cash flow minus capex came to about $781 million, while dividends totaled about $641 million. That puts the payout at roughly 82% of free cash flow. Hormel holds $839.6M in cash, and management described the company as being in “a sound financial position with ample liquidity and a conservative balance sheet.” John Ghingo, the president and CEO-elect at the time of the August call, was frank:
“Certainly, the dividend continues to be very important to us. And so that will continue to remain a priority for us in the future.”
What Is Squeezing Hormel
Third-quarter revenue fell 2.4% to $2.961B. Retail dropped 4.3%, while Foodservice posted its 12th straight quarter of organic growth. On the call, Ghingo said, “I would describe the consumer environment right now as not improving.” Input costs offer some relief. Interim CFO Paul Kuehneman said lower pork prices “help our margin profile over time, and you will see that carry forward here based on our current forecast into the upcoming quarters and into ’27 as well.”
How General Mills and Kraft Heinz Stack Up
General Mills (NYSE:GIS) pays $0.61 a quarter, or $2.44 a year. That is about 76% to 81% of its fiscal 2027 adjusted EPS guidance, roughly the same coverage Hormel has. The difference is direction. General Mills expects adjusted operating profit to fall 13% to 8%, while Hormel guides to 6%–10% adjusted EPS growth. Kraft Heinz (NASDAQ:KHC) has a bigger buffer. It paid $1.60 per share against $2.60 in adjusted EPS, a payout of about 62%. However, it took $7.4 billion in impairments in its latest quarter and has put its planned separation on hold.
Where Hormel’s Dividend Could Crack
Free cash flow is the biggest risk. In fiscal 2025, operating cash flow minus capex came to only $534 million, while dividends totaled $633 million. If retail volumes keep shrinking and cash flow drops back to that level, Hormel would have to pay part of the dividend out of its cash balance.
Verdict: Hormel’s dividend looks sustainable on current cash flow. A 61st consecutive raise appears likely, though increases near 1% may continue until earnings growth restores the buffer.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
