It’s been slow going on the buying front for me lately. I purchased 25 shares of Hormel Foods Corp on March 20th at $34.95 per share, totaling $873.75. Since switching to Interactive Brokers, I’ve stopped most of my DRIP investing. This is because IB only DRIPs complete shares. I don’t own enough shares in most companies to equal a full share. Because of this, I’ve decided to start self-directing my dividend reinvestment. By this I mean, I’m taking my monthly dividend income and choosing where to invest the money. Last month, I chose Hormel Foods. I wrote about what I call Intentional DRIP Investing a while back.
Fast forward to yesterday, I bought 75 more shares of Hormel Foods at $34.56 per share, totaling $2,592. I’m now the proud owner of 100 shares of Hormel foods at a total cash allocation of $3,465.75. This new stock buy will increase my annual dividends by $68. This is good for me, because I set a 2017 goal of $7,500 in annual dividends, so I need to start buying more stock.
Hormel Foods Business Summary
Hormel Foods Corporation is engaged in the production of a range of meat and food products. The Company operates through five segments: Grocery Products, which is engaged in the processing, marketing and sale of shelf-stable food products sold for the retail market; Refrigerated Foods, which consists of the processing, marketing and sale of branded and unbranded pork, beef, chicken and turkey products for retail, foodservice and fresh product customers; Jennie-O Turkey Store (JOTS), which consists of the processing, marketing and sale of branded and unbranded turkey products for retail, foodservice and fresh product customers; Specialty Foods, which consists of the packaging and sale of nutritional and private label shelf-stable products to industrial, retail and foodservice customers, and International & Other, which includes Hormel Foods International Corporation, which manufactures, markets and sells the Company products internationally. Source: www.schwab.com.
Hormel Foods Brands
The image below is of Hormel’s featured brands. I’m sure you’ll find many familiar product lines
Hormel Foods Business Segments
Hormel Grocery Products
The grocery segment is shelved foods, anything that doesn’t need to be refrigerated. Think Skippy Peanut Butter, SPAM, La Victoria Salsa, etc. In 2015, this segment represented net sales of $1,617.7 million (17% of total), and operating profit $239.1 million (21% of total).
Hormel Refrigerated Foods
This segment is you guessed it cold items. Bacon, lunch meats, etc. In 2015, this segment represented 2015 net sales of $4,372.3 million (47% of total), and operating profit: $425.0 million (38% of total).
JENNIE-O Turkey Store
Jennie-O Turkey Store offers over 1,500 products distributed in more than 20 countries. In 2015, net sales were $1,635.8 million (18% of total), and operating profit was $276.2 million (24% of total).
Hormel Specialty Foods
Hormel Specialty Foods segment sells products to retail and healthcare customers, as well as foodservice operators and food manufactures. In 2015, net sales were $1,103.4 million (12% of total), and operating profit was $105.9 million (9% of total).
International and Other
Hormel Foods International & Other segment is managed by Hormel Foods International Corporation. This segments sells Hormel products internationally through joint ventures, licensees, subsidiaries, and direct sales. In 2015, net sales were $534.7 million (6% of total), and operating profit was $87.9 million (8% of total).
Hormel Foods Dividends and Growth
- Annual Dividend Yield of 1.97%
- Annual Dividend Rate (IAD) $0.68
- Payout Ratio (TTM) of 35.98%
- Dividend Coverage Ratio (TTM) of 277.96%
- 3 Year Dividend Growth Rate of 19.3%
- 5 Year Dividend Growth Rate of 17%
- 10 Year Dividend Growth Rate of 14.9%
Hormel has been consistently paying dividends for many years. The chart below shows Hormel dividend payments since 1990. The chart illustrates the company’s commitment to shareholder through dividend payments. Note that the past 10 years has seen a steep incline in increased dividend yield.