To The Moon

When a company pays dividend, it's great news for shareholders. And when a company pays dividend every quarter, even better! But when a company consistently increases its dividends year after year because of profit growth, that's really something special.

If increasing dividend is a good thing, then $Hormel(HRL)$ is one of the best dividend stocks around. On February 15th, the company paid its 382nd consecutive quarterly dividend. In addition, this dividend was 3% higher than the previous one, marking the 58th consecutive year that Hormel has increased its dividend, making the stock one of the few "dividend Kings."

While Hormel stock has historically delivered huge gains for investors, the stock is now in a mess, down about 45% from its peak. This is the worst correction for Hormel stock in fifty years. So, this is an unprecedented correction for Hormel's stock, and its valuation is unusually low.

When investors compare a company's market valuation to its earnings, focus on the so-called price-to-earnings ratio (P/E). Hormel's P/E is sitting at around 21, which is well below its 10-year average and is within spitting distance of a once-in-a-decade low valuation.

Hormel's stock is poised for earnings growth in the coming years. When you think of Hormel, many consumers immediately think of its Spam. But the company sells many other consumer food categories as well. Plus, Hormel supplies products to foodservice companies, which is a big profit opportunity for the company.

You might think that Hormel's more mature brands (like Spam) wouldn't grow too fast. However, in 2021, the company acquired the Planters brand. And Planters has a bigger market share in convenience stores than Hormel's own brands. Now, Hormel has the opportunity to gradually expand its foodservice product offerings in convenience stores.

In summary, Hormel expects growth in the convenience store channel in the coming years, which is a higher-margin revenue stream for the company. This will drive significant long-term earnings growth and potentially push the stock price higher over time. Plus, with its attractive valuation, now is one of the best times to buy Hormel stock.