Is Hormel Foods a Great Dividend Stock? Here’s Why You Should Consider Investing Now
When it comes to dividend stocks, consistency is key. And Hormel Foods (NYSE: HRL) is one of the greatest dividend stocks out there. With a remarkable track record of consistently increasing its dividend year after year, Hormel is a reliable choice for dividend investors. However, despite its dividend greatness, Hormel stock has recently experienced a significant drop of about 45%. But this drop has also brought the stock to an unusually inexpensive valuation, making it an attractive opportunity for investors.
An Unprecedented Pullback and an Inexpensive Valuation
The recent pullback in Hormel stock is unprecedented, as it is the worst in five decades. Yet, this drop has also resulted in an unusually inexpensive valuation. When comparing a company’s market valuation to its profits, Hormel’s price-to-earnings (P/E) ratio is currently around 21. This is significantly lower than its 10-year average and presents a once-in-a-decade bargain valuation.
The Growth Potential of Hormel Foods
Hormel Foods is not just known for its Spam products. The company offers a wide range of consumer food products across various categories, including packaged foods sold in grocery stores and products supplied to foodservice companies. In fact, Hormel’s foodservice division accounted for over half of its profits in fiscal 2023. With the recent acquisition of the Planters brand, Hormel has the opportunity to expand its foodservice product offerings in convenience stores, which can lead to higher-margin revenue and future growth.
Why Invest in Hormel Stock Now
While growth in convenience store channels did not materialize for Hormel in 2023 as expected, the company has a strong long-term track record of success. Hormel anticipates growth in convenience store channels in the coming years, driven by the presence of the Planters brand. This growth potential in higher-margin revenue sources can fuel long-term earnings growth and ultimately drive the stock price higher over time. Additionally, the current compelling valuation makes it an opportune time to buy Hormel stock.
In conclusion, Hormel Foods is a great dividend stock with a history of consistently increasing its dividend year after year. Despite the recent pullback, the stock now trades at a once-in-a-decade bargain valuation. With the company’s growth potential in convenience store channels, investing in Hormel stock now can lead to solid long-term returns. Don’t miss out on this opportunity to add a reliable dividend stock to your portfolio.