When looking for attractive dividend stocks, one of the key criteria is consistency. Investors want reliable companies that regularly increase their dividends every year, continuously and without fail. This ability to increase dividends regularly and steadily is one of the main factors that attracts investors' attention and contributes to long-term prosperity.

The philosophy in this area is that companies with a long history of regular dividend increases create a solid foundation for future investment returns. These qualities can be found in a select few companies that are able to keep their dividend policy consistent and predictable in times of economic challenge.

Very few companies have been more consistent than Hormel Foods $HRL. The food company, which owns brands like Planter's, Skippy, Spam, Natural Choice and, of course, Hormel, just raised its dividend in November for the 58th consecutive year.

The Royal Dividend Company

There are only about 15 companies in the U.S. that have a longer streak of raising their dividends than Hormel. Those that have raised their annual payouts for at least 50 years in a row are called Dividend Kings, and Hormel is one of them.

On Nov. 20, Hormel raised its dividend for the first quarter of 2024 by 3% to 28.25 cents per share, up from an initial 27.5 cents per share. The yield is a robust 3.5% with a payout ratio that is at 63%.

Over four quarters, Hormel will pay out $1.13 per share in 2024, up from $1.10 per share in 2023. In addition to an astounding 58 consecutive years of dividend increases, it has paid a quarterly dividend for 382 consecutive quarters, without interruption, since its founding in 1928 - 95 years ago.

"Continued dividend growth remains one of our top priorities," said Hormel Chairman, President and CEO Jim Snee.

If you're a dividend investor, you'd probably be quite happy with this income and its relatively stable long-term yield. Over the past 30 years, Hormel has generated an average annual yield of 8.3%, and with the dividend reinvested, it's been 10.6% annually. That's not bad at all.

Over the last 20 years, then, the average annual return has been almost as good, 7.9%, and with the dividend reinvested, 10.3%.

However, over the last 10 years, Hormel has lagged with an average annual return of only 3%, or 5.7% with the dividend reinvested, well behind the annual return of the S&P 500 over the same period. So it's been a good and steady investment over the years, but is it still a good buy?

Company performance

Hormel Foods, a company with a long history and an extensive range of food products, occupies a prominent position in the market. Its segments include a wide range of products that span from iconic brands like Planter's, Skippy and Spam to high-end products like Natural Choice and Hormel itself. This diversification of its product portfolio enables the company to maintain a strong market position and appeal to a wide range of customers.

Hormel Foods consists of three main segments: retail, foodservice and international. The retail segment includes distribution of products to retail chains and supermarkets worldwide, which includes many of the company's domestic brands such as Skippy and Natural Choice. The food industry is engaged in the manufacture and distribution of food products that are intended for the broader consumer market. The International segment focuses on the expansion of Hormel Foods' brands in the global marketplace, while seeking to tailor its products to local preferences and demand.

This segmentation allows Hormel Foods flexibility and responsiveness to different market needs. It also provides it with a stable revenue base and allows it to develop new markets and expand into new areas. Through this strategy, Hormel Foods has established itself as one of the leading companies in its industry that is able to deliver long-term value to its shareholders and customers.

A robust portfolio

The company caters to global retail, foodservice, deli and commercial customers. Hormel's strategic focus on branded food products rather than commodity meat products has ensured premium pricing and fostered customer loyalty.

Brand Portfolio $HRL 👇

Innovation

Hormel is also actively involved in a wide range of projects and initiatives that have a positive impact on the environment, health and social responsibility. One priority is to support regenerative agriculture and soil restoration, which helps mitigate the impacts of climate change. Hormel also systematically minimises greenhouse gas emissions and reduces the negative impact on air quality during production and supply logistics.

Another important area is reducing food waste and minimising waste. The company strives to achieve zero food waste and is actively working on innovations in eco-packaging that minimise the use of materials and promote recycling.

In addition, Hormel is committed to improving conditions for animals in its farming operations and intends to ensure that their welfare is properly cared for. The company also works to ensure that its products are affordable and accessible to all consumers.

Other priorities include employee safety, health and wellness, promoting diversity, equality and inclusiveness in the work environment, fighting hunger and supporting community projects and education. Hormel Foods is thus actively engaged in a wide range of areas that contribute to sustainable development and the improvement of the environment and society as a whole.

Quarterly results

Hormel Foods reported results for the first quarter of fiscal year 2024, which ended January 28, 2024. The company reported sales volume growth in all segments and reaffirmed its full-year guidance. Highlights include sales volume of 1.1 billion pounds, up 4%, and net sales of $3 billion, up 1%. Operating profit was $284 million, down 2%, and adjusted operating profit was $295 million, up 2%.

The company expects continued growth in Foodservice, improvements in its international business and further progress on its transformation and modernization initiatives. For fiscal year 2024, the company confirms estimated growth in net sales and earnings per share.

The company's segments include Retail, Foodservice and International, which reported sales and earnings growth, with the exception of the International segment, which experienced lower sales in China. Hormel Foods remains firmly focused on its strategic priorities and committed to improving its business and generating long-term returns for its shareholders.

How is the company performing over the long term?

In 2011, sales reached $7.895 billion, and have since steadily risen to more than $12 billion. However, the slowdown has been noticeable in the last year, but this is not unexpected given inflation and world events.

In 2011, net profit reached USD 474 million and gradually rose to USD 794 million in 2024. Here we do not see as much of a decline in the last year, which is due to greater efficiency and cost shifting to the customer.

Valuation

Hormel Foods is a company with an attractive valuation and solid financials. The price-to-earnings (P/E) ratio is 23.60, indicating that the market is pricing the company's earnings relatively well relative to its market value. The P/B ratio is 2.39, indicating that the stock is trading at a slightly higher price relative to value. The price-to-earnings (P/S) ratio is 1.54, which indicates that investors are willing to pay $1.54 for every dollar of the company's earnings.

The debt-to-equity (D/E) ratio is low at 0.42, indicating that the company has a sound financial structure with relatively low debt. Similarly, the debt-to-equity ratio (D/C) is 0.30, which is another indication that the company has good management of its debt.

On the performance side, the company is performing solidly. Its earnings per share (EPS) stands at 1.45, which is an indication of the profitability of the stock. The company has a fairly decent return on asset (ROA) of 5.88% and return on equity (ROE) of 10.26%. The return on invested capital (ROIC) is 7.49%, which is another indicator of investment efficiency.

Gross profitability (Gross) is 16.75%, operating profitability (Operating) is 8.82% and net profitability (Net) is 6.55%. This shows that the company has a solid cost control and uses its resources efficiently to achieve profits. Free cash flow (FCF) is 5.17%, which is another positive signal regarding financial stability and ability to generate cash flow.

Analysts' expectations

Based on 6 Wall Street analysts who have offered 12-month price targets for Hormel Foods in the last 3 months. The average target price is $31.17 with a high forecast of $34.00 and a low forecast of $27.00.