Key Points
Hormel is a Dividend King food maker with a protein focus.
General Mills is a packaged food giant that can adapt to changing consumer preferences.
Consumers are tightening their budgets and, at the same time, GLP-1 drugs are changing the way people eat. That has investors worried about food makers like Hormel Foods (NYSE: HRL) and General Mills (NYSE: GIS). The stocks have historically high yields of 5.2% and 6.5%, respectively. If you are looking for dirt cheap dividend stocks, you'll want to get to know these consumer staples companies today.
Hormel and General Mills are reliable dividend payers
Hormel is a Dividend King, with six decades worth of annual dividend increased under its belt. General Mills has paid a dividend for 127 years and counting. The dividend has trended generally higher for decades. These are not upstarts; they are seasoned food companies that are going through a difficult period. And they have both proven they can survive hard times while continuing to reward dividend investors well.
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The key is that both Hormel and General Mills make necessity items. You aren't going to stop eating because there is a recession or a bear market. And they both have long and successful histories of updating their brand portfolios to keep pace with changing consumer preferences. Hormel's protein focus is particularly on point today, as GLP-1 drug use is spreading. Increasing protein intake is important to stave off muscle loss. However, if history is any guide, they will both figure out how to deal with the current headwinds, using tools such as innovation, acquisitions, and cost-cutting, among others. General Mills has notably been leaning into growing trends like pet food and moving away from food brands that have seen stagnant growth, such as Hamburger Helper, which was recently sold.
The value opportunity is huge
As already highlighted, both Hormel and General Mills have historically high dividend yields, which suggests the stocks are cheap. Although earnings are under pressure, making price-to-earnings ratios less useful, both companies have price-to-sales and price-to-book ratios that are well below their five-year averages. That helps confirm the value opportunity available for investors today.
With each company actively working to turn its business around, buying today will get you in before those upturns arrive. A $1,000 investment will buy around 26 shares of General Mills or 45 shares of Hormel. And you'll lock in lofty yields from companies that have proven they know how to survive and reward income investors for sticking around through both the good and bad times.
Reuben Gregg Brewer has positions in General Mills and Hormel Foods. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.