Key Takeaways
- Hormel Foods yields 5.4% and Smithfield Foods 6.6%, and both declared their regular quarterly dividends this fall.
- For retirees, the cash and the balance sheet behind each check matter as much as the yield.
- Smithfield’s dividend took 54% of free cash flow over the twelve months to Sept. 27, 2026, against 82% for Hormel over the twelve months to July 26, 2026.
- Hormel is taking on new debt for its $1.055 billion Brakebush deal, while Smithfield’s Fresh Pork segment lost $89 million in its latest quarter.
Retirees hunting for dividend income in the meat aisle have two big names to weigh: Hormel Foods (HRL), yielding 5.4%, and Smithfield Foods (SFD), yielding 6.6%.
Both have had a busy fall. Hormel declared its 393rd consecutive quarterly dividend on Sept. 28, then agreed two days later to buy Brakebush Brothers for $1.055 billion, paid with cash and new debt. Smithfield lowered its sales outlook on Oct. 27 as pork prices slid, and declared its $0.3125 quarterly dividend two days later.
So if you need a check you can count on, which one earns the spot?
| Metric | Hormel Foods (HRL) | Smithfield Foods (SFD) |
|---|---|---|
| Dividend yield | 5.4% | 6.6% |
| Annual dividend | $1.17 | $1.25 |
| Cash dividend payout ratio (TTM) | 82% | 54% |
| Net debt/EBITDA (LTM) | 1.2x | 0.7x |
| Interest coverage (LTM) | 12.6x | 39.7x |
Sources: TIKR, StockAnalysis. Hormel’s payout ratio covers the twelve months to July 26, 2026, and Smithfield’s the twelve months to Sept. 27, 2026.
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Hormel is paying out most of its cash
Hormel’s foodservice business just posted its 12th straight quarter of organic sales growth, led by premium prepared proteins, branded pepperoni and Jennie-O turkey. Retail shrank as Hormel exited whole-bird turkey and private-label snack nuts, and as shoppers chased value. Net sales came to $2.96 billion in the third quarter of fiscal 2026, ended July 26, from $3.03 billion a year earlier, though management raised its fiscal 2026 adjusted EPS guidance to $1.45-$1.51.
But the dividend has grown faster than the cash behind it. Dividends paid rose every year, from $296 million in fiscal 2016 to $633 million in fiscal 2025, while free cash flow fell from $785 million to $534 million:
Fiscal 2025’s risky 118.5% payout ratio was the only year on the chart when dividends outran free cash flow. Over the twelve months to July 26, 2026, the ratio eased to 82%, which still leaves a thin cushion.
John Ghingo, Hormel’s CEO since Oct. 25, said on the third-quarter call that “the dividend continues to be very important to us.” The risk is Brakebush: the deal adds new debt, is expected to close in Hormel’s first quarter of fiscal 2027, and isn’t expected to add to adjusted EPS until fiscal 2028.
Smithfield is riding out a pork slump
Hormel’s pressure is in retail. Smithfield’s is in pork. Its fresh pork and hog businesses face global oversupply, softer domestic demand and shrinking export openings in markets like Mexico and China amid tariffs. Third-quarter fiscal 2026 sales fell 8.3% to $3.4 billion, operating profit dropped to $127 million from $310 million, and Fresh Pork posted an $89 million operating loss. Packaged Meats held up, with operating profit of $230 million against $226 million a year earlier.
Smithfield’s free cash flow covered its dividends in every year on the chart except fiscal 2022, when it paid $496 million on $178 million:
Over the twelve months to Sept. 27, 2026, dividends took a well-covered 54% of free cash flow. Smithfield then paid $441 million in cash on Oct. 26 for Nathan’s Famous, a brand it had only licensed, and declared its $0.3125 dividend three days later.
It’s also cutting its own hog production by about 900,000 hogs a year through a new long-term supply agreement. As CEO Shane Smith put it on the third-quarter call, “This strategy will not eliminate commodity volatility, but it reduces capital and earnings exposure and improves the durability of our integrated model across the cycle.”
So which dividend wins?
For retirees, Smithfield Foods is the better dividend stock. It pays the bigger check, and with its dividend taking 54% of free cash flow against Hormel’s 82%, it has more cash behind it. It also carries much less debt. Smithfield’s net debt to EBITDA fell from 2.9x in fiscal 2023 to 0.5x in fiscal 2025:
That isn’t to say Hormel’s dividend is unsafe. It has paid 393 straight quarterly dividends and grew its dividend per share 8.8% a year from fiscal 2015 to fiscal 2025, from $0.50 to $1.16. At its five-year pace of 4.5% a year, $10,000 invested in Hormel pays $540 a year now and about $804 in year 10, call it an 8.0% yield on today’s cash. Smithfield can’t match that record. It’s just that, with a debt-funded deal on the way and less room in its cash flow, Hormel’s check rests on a thinner cushion. I’d rather collect Smithfield’s bigger, better-covered one.
Of course, Smithfield expects Fresh Pork to land anywhere from a $50 million loss to breakeven for fiscal 2026. If the pork slump runs well into next year, watch whether free cash flow still covers the dividend as comfortably.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
