Is Hormel Foods in Danger of Being Kicked Out of the DGI Crab 50?

I've defended Hormel Foods for a long time.

But I'm not going to defend a stock simply because I've owned it, liked it, or included it in the DGI Crab 50.

Stocks have to continue earning their spot.

And after another ugly week for Hormel Foods, I think it's fair to ask a question that would have seemed almost ridiculous several years ago:

Is HRL in danger of being removed from my 50 dividend growth stocks?

My answer today is:

Yes, it's in danger.

But I'm not kicking it out yet.

And the reason has much less to do with the stock price than it does with what Hormel still owns underneath that stock price.

First: The Stock Price Isn't the Problem

Hormel shares were hammered following the company's latest earnings report.

The company lowered its fiscal 2026 net-sales outlook to $12.1–$12.2 billion, with organic sales now expected to grow only 1%–2%. Q3 sales declined 2%, and management acknowledged that consumers remain under pressure.

That's not good.

But DGI Crabbers should know me well enough by now to understand something:

I don't remove stocks because their prices fall.

Quite the opposite.

A declining stock price can create exactly the valuation opportunity I'm looking for if the underlying company remains healthy.

The question isn't: Why is HRL falling?

The important question is: Is Hormel permanently becoming a worse business?

That's considerably harder to answer.

Never Forget What Hormel Actually Owns

This is where looking only at an HRL stock chart can be misleading.

Hormel isn't one struggling packaged-food brand. It's a collection of some remarkably powerful food franchises.

• SPAM
• SKIPPY
• JENNIE-O
• PLANTERS
• APPLEGATE
• HORMEL BLACK LABEL
• HORMEL NATURAL CHOICE
• COLUMBUS
• WHOLLY

...along with dozens of additional brands.

Hormel generates roughly $12 billion in annual revenue and sells products around the world.

And several of these brands occupy extremely strong competitive positions.

The #1 Brands Are Why I'm Not Giving Up

This is the part of the Hormel story I think gets overlooked.

Hormel doesn't merely own recognizable labels. It owns businesses with genuine category leadership.

SPAM

SPAM is the obvious example. It's not merely a canned-meat product. SPAM is essentially a category unto itself.

It has extraordinary recognition in the United States and unusually strong cultural positions in markets such as Hawaii, South Korea, Japan and the Philippines.

That's an incredibly difficult franchise for a competitor to recreate. You can make another canned luncheon meat. You can't manufacture nearly nine decades of SPAM brand recognition overnight.

SKIPPY

SKIPPY remains one of America's dominant peanut-butter brands. The peanut-butter aisle is effectively controlled by a small number of enormous brands, and SKIPPY gives Hormel a durable position in a product category that isn't going anywhere.

JENNIE-O

This one is particularly important to the current Hormel story.

Hormel describes JENNIE-O ground turkey as having a strong category-leadership position, and earlier this year reported notable retail-sales growth for the business.

Management has specifically identified lean ground turkey as well positioned as consumers continue gravitating toward high-protein foods.

That's important. One of the arguments against old packaged-food companies is that consumer preferences are changing. Fine. But consumers wanting more protein isn't exactly bad news for Hormel.

WHOLLY and the Mexican Foods Portfolio

Hormel's Mexican-food portfolio has also been a source of strength. WHOLLY and Herdez refrigerated guacamole have demonstrated strong consumption growth, while Herdez salsa has continued performing well.

Again, that's not what a portfolio devoid of growth looks like.

APPLEGATE

APPLEGATE gives Hormel exposure to a completely different consumer. Natural. Organic. Higher-quality proteins. Convenience.

Hormel has reported APPLEGATE consumption growth outpacing its overall edible category while gaining households.

That's another reason I'm hesitant to look at Hormel and simply declare: old food company, consumers don't want this stuff anymore.

Some parts of the portfolio are clearly performing better than others.

And Hormel Is Starting to Clean Out the Closet

This may ultimately prove very important.

Hormel has been actively reshaping the portfolio rather than pretending every business deserves to remain forever. It has sold or moved to sell businesses including Justin's, its whole-bird turkey operation and its Ceratti business in Brazil.

Management says the objective is to simplify the portfolio and concentrate resources on markets and brands offering stronger long-term opportunities.

I like that.

Sometimes a company with dozens of brands needs to admit: we don't need all of these. Sell weaker or less strategic businesses. Take the money. Invest behind the winners.

That's what I want to see.

But I'm Not Letting Hormel Off the Hook

Great brands don't automatically make a great stock.

Management still has to execute.

Q3 organic sales declined 2%. Retail sales fell 4%. Consumers are under pressure. And management lowered its annual sales expectations.

Those aren't imaginary problems.

Hormel has spent several years dealing with inflation, commodity pressures, supply-chain issues, turkey-market disruptions and changing consumer behavior.

At some point, investors have every right to say: enough excuses — show me the growth.

That's why I consider HRL a stock that needs watching closely.

Now Let's Talk About the Dividend

This is where things become particularly interesting.

Hormel currently pays $0.2925 quarterly, or $1.17 annually.

The August 17 payment was Hormel's 392nd consecutive quarterly dividend.

Hormel has paid a regular quarterly dividend without interruption since becoming publicly traded in 1928. That's almost a century.

Hormel is also a Dividend Aristocrat and has increased its annual dividend for more than half a century.

So the history is magnificent.

But history doesn't pay next year's dividend. Cash flow does.

Is the Dividend Safe?

This is where I would separate dividend safety from dividend growth. Those are not the same question.

Based on management's updated FY2026 adjusted EPS guidance of $1.45–$1.51, the $1.17 annual dividend represents roughly a 77%–81% adjusted earnings payout ratio.

That's higher than I'd ideally like. It certainly isn't the 40% payout ratio of a company swimming in excess dividend coverage.

But there's another important piece of evidence.

Hormel generated $241 million of operating cash flow during Q3, up 54% year over year, while paying $161 million in dividends during the quarter.

So I don't currently see evidence of an imminent dividend cut. I see something different:

A dividend whose growth rate may need to remain modest until earnings growth catches back up.

That's an important distinction.

The Dividend Cut Isn't What Worries Me Most

If I'm evaluating HRL for continued membership in the DGI Crab 50, I'm actually less concerned about whether Hormel can pay $1.17 next year.

I think it can.

What concerns me is whether the company can eventually get back to meaningful dividend growth.

A Tier Three stock doesn't need 10% annual dividend increases. That's not its job.

But I also don't want a company perpetually raising its dividend by a penny just to keep an impressive streak alive.

The business eventually has to generate enough earnings growth to support healthier increases. That's the test HRL needs to pass.

The Strange Thing About This Selloff

Here's what makes the current situation so fascinating.

Hormel's GAAP numbers contain several ugly one-time items, including the Brazil divestiture, an Indonesian investment impairment and a litigation settlement.

But underneath those items, management actually raised and narrowed adjusted EPS guidance.

Hormel now expects adjusted EPS of $1.45–$1.51, representing 6%–10% growth, and adjusted operating income of $1.08–$1.12 billion, also representing 6%–10% growth.

That's hardly a business falling off a cliff.

The market appears much more concerned about the revenue trajectory and consumer demand.

And frankly? That's reasonable.

So Is HRL Getting Kicked Out of the 50?

Not yet.

But I'm moving it closer to the principal's office.

Hormel still possesses too many things I value to remove it because of one more ugly stock-price move:

• A collection of powerful consumer brands, several with category-leading positions.
• Exposure to enduring protein-consumption trends.
• Approximately $12 billion in annual revenue.
• A nearly century-long uninterrupted quarterly-dividend history.
• More than half a century of dividend increases.
• Positive operating cash flow.
• Adjusted earnings expected to grow this year.
• Management actively pruning weaker parts of the portfolio.

But HRL no longer gets a free pass because it has a beautiful dividend history.

What Would Get HRL Removed?

For me, there are three developments that would materially change the discussion.

First, deterioration of the dividend. If earnings and cash flow deteriorated enough that the payout became genuinely endangered — or Hormel broke the dividend-growth streak — that would be an enormous red flag.

Second, persistent deterioration of the core brands. One bad consumer environment doesn't bother me. Several years of SPAM, SKIPPY, JENNIE-O, APPLEGATE and the other priority brands steadily losing relevance would.

Third, an inability to restore earnings growth. Eventually management has to demonstrate that portfolio reshaping, productivity initiatives and investment in its strongest brands can produce sustainable earnings growth.

That's the scoreboard I'm watching.

Final Thoughts From the DGI Crab

There's a dangerous habit investors develop when a stock falls for years.

They begin assuming the market must know something they don't.

Sometimes it does. Sometimes the business really has deteriorated.

But sometimes the market simply loses patience.

That's why I don't want to judge Hormel by the stock chart.

I want to judge Hormel by SPAM, SKIPPY, JENNIE-O, APPLEGATE, PLANTERS, WHOLLY, BLACK LABEL and the rest of the businesses underneath that ticker symbol.

Are people still buying them? Are the strongest brands maintaining leadership? Can Hormel improve margins? Can earnings grow? Can cash flow comfortably fund the dividend? And can dividend growth eventually accelerate again?

Those answers will determine whether HRL remains one of my 50 stocks.

Today, my answer is yes.

But unlike a few years ago...

Hormel has something to prove.

And I'll be watching.

Not financial advice. Do your own research.