Please ensure Javascript is enabled for purposes of website accessibility

Hormel Stock Split History: When Will the Dividend Aristocrat Split Again?

By Dan Caplinger - Mar 12, 2018 at 8:15AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The food company has done a good job of rewarding shareholders in the past, but investors want to know what's next.

From a business standpoint, Hormel Foods (HRL 0.84%) is a pretty typical company, with an emphasis on meat processing and food products that has made it a household name for millions of Americans. For investors, the impressive combination of regular dividend increases and frequent stock splits puts its shares into elite ranks. Ambitious investors want to know when Hormel's stock price is likely to get back to levels that could prompt another decision to split its stock. Let's look more closely at Hormel to see what's coming next for the company and whether another split could be just around the corner.

Hormel's history of stock splits

Here are the dates and split ratios for the stock splits that Hormel has done in the past:

Date of Split

Split Ratio

100 Shares in 1959 Would Now Be

Jan. 29, 1960

2 for 1

200 shares

Feb. 2, 1968

2 for 1

400 shares

Nov. 22, 1971

2 for 1

800 shares

Jan. 30, 1980

2 for 1

1,600 shares

Aug. 19, 1985

2 for 1

3,200 shares

April 4, 1987

2 for 1

6,400 shares

Jan. 31, 1990

2 for 1

12,800 shares

Jan. 26, 2000

2 for 1

25,600 shares

Feb. 1, 2011

2 for 1

51,200 shares

Jan. 26, 2016

2 for 1

102,400 shares

Data source: Hormel investor relations.

As you can see, Hormel has been splitting its stock for a long time. It's always been a believer in two-for-one splits, never being content to go with more modest ratios that some companies have used in order to prompt more frequent split decisions. Splits have tended to come at roughly five- to 10-year intervals.

Hormel hasn't always used the traditional approach in choosing when to split its shares. In 1987, Hormel shares were at about $50 per share before splitting, but shortly before the 1990 move, the company had only seen its stock climb into the $30s. Similarly, back in 2000, Hormel was priced below $50 per share when it did a two-for-one split, and subsequent price declines sent shares into the teens shortly thereafter.

Over the ensuing decade, Hormel waited a bit longer before splitting. But in 2011, the stock price was only in the $50s when the company decided to do a stock split, pushing the post-split price down into the $25 to $30 per share range.

Only by 2016 did the company use a more typical benchmark for doing a stock split. The company waited until its stock had climbed all the way toward $90 per share before splitting its shares, sending the price back into the $40s.

Hormel pepperoni label

Image source: Hormel.

Why Hormel stock splits don't follow a typical pattern

One big reason why Hormel doesn't follow a typical approach for stock splits is that it puts a high priority on dividends. The company is a member of the elite Dividend Aristocrats, with 52 years of consecutive annual dividend increases. At 2.25%, its dividend yield isn't stellar, but regular payouts have taken some of what would otherwise have gotten incorporated into share-price appreciation and instead paid it directly to its shareholders.

Hormel is also generous with its dividend increases. The most recent one early this year boosted the payout by more than 10% to $0.1875 per share on a quarterly basis, and sizable dividend growth has been a regular feature for the food company. Without the downward pressure on the stock that dividend payments make, Hormel would likely have been in position to do stock splits a lot more often.

Could a Hormel stock split be coming soon?

For most companies, it would be almost inconceivable that a split could happen for a stock whose price was in the mid-$30s. For Hormel, however, unusual stock split behavior is the norm. Yet with the company having just done a split two years ago, it's more likely that Hormel will wait at least a little longer rather than pulling the trigger on a stock split in 2018.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Hormel Foods Corporation Stock Quote
Hormel Foods Corporation
HRL
$50.27 (0.84%) $0.42

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
390%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.