Hormel Quietly Notches Its 392nd Straight Dividend Despite Sales Slump

Hormel Foods just paid its 392nd consecutive quarterly dividend — a streak stretching back nearly a century — even as the company posted a jarring mix of shrinking sales and expanding profits in its fiscal third quarter. Adjusted earnings per share rose 6% to $0.37, but organic net sales fell 2%, evidence that the packaged-food giant is deliberately trading revenue for margin just as incoming CEO John Ghingo takes the wheel.

The transformation shows up clearest in foodservice, which just logged its 12th straight quarter of organic sales growth, outpacing an industry still grappling with soft restaurant traffic. Premium prepared proteins and branded pepperoni are driving that segment, and profit there grew faster than revenue — a sign the mix shift toward higher-margin protein is working. Hormel backed the strategy with real cash generation: operating cash flow jumped 54% to $241 million, and cash on hand climbed to $840 million, giving Ghingo room to keep pruning underperforming categories like whole-bird turkey and private-label snack nuts without straining the balance sheet.

The retail side tells a rougher story. Consumption fell 1%, a reversal from the 1% gain posted earlier this fiscal year, and management tightened full-year organic sales growth guidance to just 1-2%, down from as high as 4% previously. Elevated freight, fuel, and beef costs squeezed gross margin to 15.9%. Yet the stock trades at just 15.29 times forward earnings, a multiple that doesn’t demand much from a turnaround still finding its footing, and 38 hedge funds now hold the name, up from 35 last quarter.

So what for long-term investors? Hormel is a reminder that a shrinking top line and a strengthening balance sheet can coexist — and that dividend consistency, not sales growth, is often the better signal of underlying discipline. Nearly a century of uninterrupted quarterly payouts has now survived a pandemic, an inflation shock, and a consumer pullback. If foodservice momentum keeps outrunning what management is cutting elsewhere, today’s valuation could look cheap in hindsight. If it doesn’t, the dividend streak at least buys patient shareholders time to find out.