3 Reasons This Is the Best Dividend Stock to Buy in May

One of the champion dividend stocks for astir 60 years has been Hormel Foods (NYSE: HRL).

The shaper of Spam, Skippy Peanut Butter, Hormel Chili, Black Label Bacon, Planters Nuts, Jennie-O Turkey products, and assorted different nutrient items has been a staple successful consumers' kitchens for decades. Its roots day backmost to 1891, and Hormel has been a nationalist institution since 1928. And for the past 59 years successful a row, Hormel has accrued its dividend payout, making it a Dividend King.

It's besides the champion dividend banal to bargain this month. Here are 3 reasons why.

1. Hormel's dividend output is precocious close present

Hormel is not lone 1 of the astir accordant dividend stocks connected the market, arsenic evidenced by its 59-year streak of gross growth. It besides has 1 of the highest dividend yields you volition find among non-REIT and BDC stocks.

Currently, Hormel's payout to shareholders yields 5.6%, meaning that 5.6% of the existent stock terms is paid retired arsenic dividends annually. Part of the crushed the output is higher than mean close present is that the banal terms is down 13% twelvemonth to day and 29% implicit the past 12 months.

In immoderate cases, a precocious output tin bespeak a dividend trap, arsenic a tanking banal terms tin suggest the institution is successful occupation and the dividend mightiness beryllium chopped to compensate. But Hormel has a 59-year way grounds of paying (and raising) that dividend, and determination are nary reddish flags suggesting the maturation streak volition extremity immoderate clip soon. In the past fiscal quarter, sales, earnings, and currency flows each increased.

2. Hormel banal is expected to rebound

Hormel banal has been trending down for the past fewer years, and the institution has made respective moves to bolster its operations and reverse the decline. The Transform and Modernize program is simply a multiyear effort launched successful 2024 to streamline expenses, optimize the portfolio by selling disconnected underperforming assets, and amended the proviso chain.

The extremity is to summation its operating income by $250 cardinal successful 2026, and it is guiding to beryllium connected gait for that. Last fiscal year, it had $719 cardinal successful operating income. In fiscal 2026, it is guiding for $1.06 cardinal to $1.12 cardinal successful operating income.

That bottom-line betterment is conscionable 1 crushed wherefore analysts are bullish connected Hormel stock. It has a median terms people of $27 per share, implying 31% upside implicit the adjacent twelvemonth oregon so.

3. Cheap dividend reinvestment

If the banal terms rises, arsenic analysts expect, the dividend output volition apt fall. However, investors tin boost the stock's full instrumentality adjacent higher by reinvesting the dividend. Hormel offers investors the added payment of reinvesting their dividends without incurring brokerage charges. That gives the instrumentality a small added boost.