Hormel Foods Corp (HRL): The Newest Dividend King

Over the last decade, HRL’s payout ratios have increased by about 10%. The company has grown its dividend somewhat faster than its underlying earnings, but not by much. If it wanted to, HRL could continue growing its dividend faster than its earnings because its payout ratio is still pretty low.

Source: Simply Safe Dividends

HRL’s high dividend Safety Score is further bolstered by the stability of the company’s business. HRL has recorded earnings growth in 27 of the last 30 years and saw its sales fall by just 3% during the financial crisis. The company’s stock also outperformed the S&P 500 by 15% in 2008. Even when times get tough, consumers still need to eat.

Source: Simply Safe Dividends

HRL has also been a free cash flow machine. Free cash flow per share has nearly tripled over the last decade, providing the firepower needed for acquisitions, dividend growth, and share repurchases. The best companies generate consistent free cash flow, and HRL is no exception.

Source: Simply Safe Dividends

HRL’s branding and efficient operations have also helped the company achieve extraordinarily high and stable returns on invested capital over the last decade. This is often a sign of a strong economic moat and a business that is creating meaningful shareholder value.

Source: Simply Safe Dividends