With the current bull market roaring, it is harder to find value. Many stocks are up near their 52 week highs and not budging much. It has been a few months since my last buy. This period has given investors a little time to build up some capital and wait for opportunities to present themselves. While the market is mostly up, lately it has come down a few notches. That is good news for investors looking to make their next purchase. I am happy to post my second buy of the year. I purchased 30 shares of Hormel Foods (HRL) at $34.00. This is a completely new company I am adding to my portfolio. See more company stats below.
Annual Dividend: $.68
Years Paying/ Increasing: 50 years
Dividend increase from prior year 14.7%
Payout Ratio: 40.7%
P/E Ratio: 20.59
You might be thinking, why HRL? It isn’t a very attractive looking stock. The dividend amount and yields are low and the earnings are average or sub-par. That’s correct, other companies out there have a way higher dividend yield and may look great on paper. But we must look big picture at HRL.
They have positioned themselves quite well for long term growth. While the dividend itself may be small, the growth rate is very large at almost 15%. And with a 50 year track record of paying or increasing dividends that will pay off in the long run. Secondly, the payout ratio is only 40% which means they should be able to continue to pay and increase their dividend by that incredible growth rate. Lastly, the sector they belong to does not change very much. So I have peace of mind holding it long term knowing a competitor can’t easily come from nowhere and take over all of the market share. People purchase from this sector regardless of the economic condition so earnings will most always be present. Also, from a consumer’s standpoint, I personally buy their products so I know it has quality behind the numbers.
As stated above, HRL has a dividend yield of 2% or $.68 annually. This will add another $20.40 to my yearly dividend income. Do you like HRL? Are there any other companies that are on your watch list that look appealing? Have you purchased any other stocks recently?