Hormel Foods Corp. (HRL) is my top pick for income and value investors this year. The packaged foods company has struggled over the past few years due to input cost inflation, changes in sales models, and operational execution challenges. But I view Hormel as a long-term buy, writes Prakash Kolli, editor of Dividend Power.
Hormel is a market leader in branded and commodity pork and turkey. It is also a market leader in nuts. It operates in three segments: Retail, Food Service, and International. Familiar brand names include Hormel, Black Label, Dinty Moore, Planters, Corn Nuts, Jennie-O, Skippy, Spam, Applegate, Sadlers, Old Smokehouse, and many more.
Total revenue was approximately $11,921 million in the fiscal year 2024 and $11,824 million in the past twelve months. Revenue peaked in 2022, then declined in 2023 and 2024 due to difficult business conditions. Hormel faced higher input cost inflation and could only enact limited price increases due to cost-conscious customers.
Additionally, the firm changed from a customer-centric sales model to a product-based approach. Earnings per share growth has fluctuated recently because of the same reasons. The share price declined around 24% in 2025 – and it’s down more than 50% since its all-time peak in April 2022.
That said, the firm’s prior CEO has returned as the interim CEO. I expect operational execution to improve, and recent increases in organic sales volumes and third-quarter results are promising. Additionally, Hormel owns many recognized brands that are ranked No. 1 or No. 2 in their respective categories.
Hormel’s divided yield is also nearly 5%, the highest in a decade – and it is supported by acceptable safety metrics. The balance sheet is also sound with a 1.43X leverage ratio and an A-/A1 investment-grade credit rating, which is upper-medium grade.
In addition, the equity is a prominent Dividend King with 59 consecutive years of increases. The growth rate is now in the low single digits, but it was higher in the past. The last increase was in November 2024.
Investors have largely ignored Hormel, and consumer staples stocks underperformed the broader market in 2025. As a result, when combined with lower anticipated earnings in 2025, the forward P/E ratio is approximately 16.2X, below the ranges for the past five and ten years. I believe Hormel offers a favorable risk-to-reward profile for investors, and the return of the prior CEO may serve as a catalyst for improved results.
Recommended Action: Buy HRL.
