This Dividend King Yields 5 Times the S&P 500. Is It a Buy Now?

The numbers around Hormel Foods' (NYSE:HRL) dividend are pretty impressive. On Nov. 16, it will have paid a dividend for 393 straight quarters, which translates to 98 years.

Yes, the maker of Spam, Hormel Chili, Black Label Bacon, Planters, and Skippy peanut butter, among others, has paid a dividend every quarter since it became a public company in 1928.

The company has increased its annual payout for the last 60 straight years, making it a Dividend King (a company that has raised its annual dividend for at least 50 consecutive years). Hormel Foods has a record of consistency that is very hard to match.

It also pays one of the highest yields among stocks that aren't real estate investment trusts (REITs) or business development companies (BDCs). Hormel pays a dividend yield of 5.27%, which is almost 5 times the average yield on the S&P 500.

This high-yield dividend stock has been a staple in investors' portfolios for decades, but is it still a buy?

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Dividend King

Through the first nine months of 2026, Hormel sales have ticked up to $8.96 billion from $8.92 billion the previous year. Adjusted earnings, excluding divestitures, impairments, and other one-time expenses, were up about 6% through the first nine months.

In the third quarter, net sales were off 2% to $2.96 billion while adjusted earnings rose 6% to $0.37 per share.

Operating cash flow skyrocketed 54% to $241 million, due to improved inventory management and better working capital performance.

For fiscal 2026, Hormel lowered its sales guidance to 1% to 2% growth, down from 1% to 4% previously. Adjusted earnings guidance, however, rose to $1.45 per share to $1.51 per share from the previous guidance of $1.43 per share to $1.51 per share.

60 years and counting

Hormel had some $840 million in cash and cash equivalents at the end of the third quarter, boosted by the sale of its operations in Brazil under the Ceratti brand.

But in September, Hormel announced that it was acquiring Brakebush Brothers, a chicken company, for $1.1 billion. The deal will close in the first quarter of 2027. It's part of Hormel's strategic repositioning to shed underperforming assets and increase its footprint in growth areas, like chicken. The price is pretty hefty and will draw down its cash position and raise its debt.

But the good thing is that Hormel's free cash flow -- cash flow after capital expenditures and operating expenses -- is expected to rise to $650 million to $700 million in 2026 and to $780 million in 2027, according to S&P Global Market Intelligence. This is due to several factors, including improved profitability, reduced working capital needs, and lower capex.

That should allow Hormel to increase its dividend in the near term.

Should you buy?

Hormel stock has been tanking for the past five years, with an average annualized five-year return of -12.7%.

But Wall Street analysts are fairly bullish on a turnaround, with 38% rating it a buy and 62% calling it a hold. It has a median price target of $24.50, which suggests about 13% upside.

If you are looking for a stock to provide a reliable, high-yield dividend, Hormel remains a solid choice. Even though it has a high payout ratio of 81%, its free cash flow increases should keep the dividend safe.

But for a longer-term view, watch for the Q4 earnings on Dec. 3 for more on the Brakebush acquisition and the 2027 outlook.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.