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A History of the HRL Dividend and Where it Could Go from Here

Have you ever heard of Hormel (HRL) before? Hormel is very well known in the grocery store space, but they’re equally, and maybe even more so, well known for an extremely impressive HRL dividend throughout the years. 

Chances are that you have even if it isn’t ringing a bell for you right now.  Hormel is a Fortune 500 company that has been around for over 125 years, so they must be doing things right. 

hrl dividend

They are a company that owns over 30 food brands with some of the more popular brands being Jennie O’s, Spam and Justin’s.  Not going to lie, I eat their Jennie O’s ground turkey at least once a week and I didn’t even know that it was a Hormel Brand. 

But that’s not what I am writing about!

I am writing about the HRL dividend.  I told you that it is extremely well known in the investing community and it’s well known for a great reason – they are a dividend king! 

You’ve likely heard the term Dividend Aristocrat which identifies a stock that is in the S&P 500 and has experienced 50+ straight years of annual dividend growth.  A Dividend King is very similar except instead of 50 years, the company has experienced 25+ years of annual dividend growth.  That is such an impressive feat. 

When you really think about it, it takes a very impressive company to have that sort of safety to be able to continuously grow their dividend and never need to stop the growth or even eliminate the dividend due to some financial hardships that the company is going through. 

Below shows the dividend history that HRL has experienced since they implemented their dividend for the first full year in 1990.

Since 1990, Hormel has consistently grown their dividend and never even grown at a slower rate than 2.81% annually.  On the contrary, the max dividend growth in any year was 25% and that was just a few years ago in 2015. 

The annual average was 12% and the median was 12.08% which tells me that we’re not experiencing major outliers that are skewing the data and making the dividends look different than they actually are.

Something that I find interesting is that 5 of the highest 29 annual dividends are since 2011 which means things are definitely trending in the right way!  Below shows the ranking of the annual dividend % increase by year from highest to lowest:

Hormel has also gone through 4 different 2:1 stock split in the company’s history, which occurred in 1990, 2000, 2011 and 2016.  As an owner of the stock, stock splits are usually a wonderful thing and can really help drive some value to their shareholders as we have seen with HRL. 

Looking only at the dividend of a stock is definitely not advised because a dividend is only a part (and a small part at that) for you to consider when you should be looking for a company to invest in. 

That being said, having a long, steady, successful period of continuously increasing dividends is not something that should absolutely be taken into consideration.  Below I have shown three screenshots from 1990, 2000 and 2010 to show you what a $10,000 investment would’ve turned into by using this great online calculator

The beauty of this calculator is that it considers things like stock splits and it will DRIP your dividends, so you really can get a true look at what your investment would now look like.  Let’s take a look!

1990

21% for a solid 29 years sounds pretty dang good if you ask me.  If I could give someone $10,000 and have nearly $3 million in 29 years I would sign up for that All. Day. Long.

Unfortunately, this calculator doesn’t allow you to select the S&P 500 but they offer a different calculator to do that calculation. 

If I would’ve invested $10,000 into the S&P 500 on 1/1/90 then I would now have $149,595.42 and would’ve realized an average annual return of 9.77%.  Again, I would take that all day, but we’re talking $3 million instead of about $150,000 – not even comparable. 

This really should show the importance of doing your own analysis and not just trusting in an index.

2000

Doing the same thing from 2000 would result in $251,324 for HRL with an annualized return of 17.59% and the S&P 500 would’ve resulted in $29,325 with an annualized return of 5.82%. 

The returns aren’t that much worse, but the total values are wayyyy lower – that should be a major indicator in the value of investing early and often as you’re just getting started in the market.

2010

The 2010 returns are pretty strong, too!  The S&P 500 experienced annual returns of 12.74% which is a really strong return but still way worse than HRL as the total S&P 500 value would be $29,434.

The fact of the matter is that looking for a company that is paying a strong, growing dividend like HRL is will be a major indicator of a company that seems like they are poised for a period of long-term success. 

Personally, I think that looking at Dividend Kings might be a way that you can see a company show you a long period of sustained growth but you’re still able to get in and invest with them long before they actually become a Dividend Aristocrat and start to get all of that attention of the dividend community. 

We often talk about the importance of zigging when you should zag and quite simply just having a contrarian view on things and I think that investing in a strong, Dividend King like HRL can be a way to be safe and also enjoy those extremely strong gains throughout your life.

HRL has had many great years of great dividend growth and also shown the ability to adapt and continue to grow their share price.  I don’t see any reason for that to change in the near future – do you?