Hormel Foods (NYSE:HRL) continues to demonstrate its commitment to shareholders by announcing its 60th consecutive annual dividend increase even as the stock struggles with a year-to-date decline of 26%. The company faces significant headwinds from rising commodity costs that have impacted earnings, yet it maintains a yield just over 5% that is far above the S&P 500 average of just 1.2%. While sales momentum is building in key segments like retail and foodservice, the management team acknowledges that profit recovery may lag into the coming fiscal year.
In November, the Board of Directors authorized a 1% increase to the quarterly dividend, raising it to $0.2925 per share. This adjustment brings the annualized rate to $1.17 and cements the company's status as a reliable income generator. This consistency stands in contrast to its recent market performance, as the stock has fallen by 50% over the last five years. Despite the share price erosion, the underlying business generated solid top-line results in the third quarter of fiscal 2025, with organic net sales rising 6% to over $3 billion. However, inflation in input costs led to what management termed disappointing earnings results of $0.33 per share.
Interim CEO Jeff Ettinger emphasized that while the portfolio remains relevant to consumers, steep commodity inflation hindered profitability. The company is employing targeted pricing actions and its Transform and Modernize initiative to mitigate these pressures. Investors will be watching closely when Hormel releases its fourth-quarter earnings on December 4, where the company expects net sales between $3.15 billion and $3.25 billion.
While Hormel has grown its dividend over the years, the stock does come with some risks.
