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Key Takeaways:
- Tyson Foods offers a 3.6% dividend yield and a history of steady payouts, despite going through some of the toughest earnings years in its history.
- The company trades at a low valuation, with forward estimates suggesting 34% upside as margins recover and cost-cutting measures take hold.
- While the dividend growth has been modest, the current payout remains stable and could resume growing once earnings normalize.
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Tyson Foods may not grab headlines, but it’s a key force behind the food that shows up on dinner tables across the country.
As one of the largest meat producers in the world, Tyson supplies chicken, beef, pork, and prepared foods to supermarkets, restaurants, and institutions. With well-known brands like Jimmy Dean, Hillshire Farm, and Tyson, the company has built a long-standing presence in households and grocery aisles throughout the U.S.
After a tough 2023 filled with margin pressure, excess capacity, and elevated input costs, the stock has taken a hit. But even with those challenges, Tyson has continued to pay its dividend and now could offer over 30% upside.
With cost-cutting in motion and earnings expected to improve, Tyson might be one of the more overlooked opportunities for investors seeking dividend income in the consumer staples space.
Tyson Looks Undervalued Today
Tyson Foods stock trades at just $54 per share, but based on analysts’ estimates, it looks like the stock could reach about $73/share by late 2027.
That would represent 34.3% upside over the next 2.2 years, or roughly 14.2% annual returns, if earnings recover and the stock’s valuation multiple returns to normal levels.
Wall Street analysts expect a slow and steady rebound in Tyson’s earnings as inflation cools, input costs stabilize, and the company resets after a few rough years.
With a stable dividend and a potential long-term recovery ahead, Tyson could appeal to income investors who are patient enough to ride out the current uncertainty.
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Tyson’s Dividend Yield Is Well Above Normal
Tyson’s dividend yield is now 3.6%, which is well above its 5-year average. This is mainly because Tyson stock is down 35% in the past 3 years.
The company has faced a mix of challenges. Demand for premium beef has softened, chicken prices have come down from unsustainable pandemic highs, and feed costs have remained elevated. On top of that, Tyson struggled with operational inefficiencies like overproduction, underutilized plants, and logistics costs, which all squeezed profitability.
In 2023, Tyson began a major restructuring, closing several plants, cutting jobs, and aiming to reset its cost base. Management expects $1 billion in productivity savings by the end of 2025, and margins are already showing early signs of recovery. While earnings remain below pre-pandemic levels, analysts expect gradual improvement through 2026 as Tyson brings supply in line with demand and benefits from improved efficiency.
For long-term investors, the current yield could be a sign of undervaluation rather than distress. If the margin recovery continues as expected, today’s dividend looks sustainable, and the stock could offer meaningful upside as sentiment shifts.
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Dividend Is Holding Up Surprisingly Well
Tyson’s earnings collapsed in 2023, with EPS falling to $1.34, down more than 80% from just a year earlier. That sharp drop came from a perfect storm of soft demand for beef, falling chicken prices, elevated feed and labor costs, and operational inefficiencies from excess production. The company faced pressure across every major segment, and margins were squeezed as costs rose faster than Tyson could adapt.
Despite the steep decline in profits, Tyson held its dividend steady at $1.94 per share. That pushed the payout ratio to 145%, far above normal levels, but it also sent a clear message. Management believed the downturn was temporary and chose to maintain investor confidence.
Looking ahead, analysts expect EPS to recover steadily, reaching $3.81 by 2025 and over $5.00 by 2027. That rebound is being driven by Tyson’s restructuring efforts, cost reductions, and better alignment between supply and demand across its protein segments. If that recovery holds, the payout ratio would fall back toward a sustainable 40 percent range, giving Tyson room to resume dividend growth.
For long-term investors, the fact that the company maintained its dividend through the worst of the cycle suggests a level of resilience and quality that the market may be undervaluing today.
See Tyson’s full growth forecast and analyst estimates. (It’s free) >>>
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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 stocks mentioned. Thank you for reading, and happy investing!
