How To Earn $500 A Month From Hormel Foods Stock Following Q2 Results

Zinger Key Points
  • A more conservative goal of $100 monthly dividend income would require owning 1,062 shares of Hormel Foods.
  • An investor would need to own $163,229 worth of Hormel Foods to generate a monthly dividend income of $500.

Hormel Foods Corp HRL reported mixed financial results for its second quarter last week.

On May 30, the Austin, Minnesota-based company said second-quarter fiscal 2024 sales declined 3% year-over-year to $2.887 billion, missing the consensus of $2.967 billion. Adjusted EPS was 38 cents, down from 40 cents YoY and above the consensus of 36 cents, according to data from Benzinga Pro.

Hormel revised its adjusted EPS expectation to $1.55 – $1.65 from $1.51 – $1.65, versus consensus of $1.58.

On May 31, JPMorgan analyst Thomas Palmer upgraded Hormel Foods from Underweight to Neutral and raised the price target from $28 to $29.

With the recent buzz around Hormel Foods, some investors may be eyeing potential gains from the company's dividends too. As of now, Hormel Foods offers an annual dividend yield of 3.68% — a quarterly dividend amount of 28.25 cents per share ($1.13 a year).

So, how can investors exploit its dividend yield to pocket a regular $500 monthly?

To earn $500 per month or $6,000 annually from dividends alone, you would need an investment of approximately $163,229 or around 5,310 shares. For a more modest $100 per month or $1,200 per year, you would need $32,646 or around 1,062 shares.

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To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($1.13 in this case). So, $6,000 / $1.13 = 5,310 ($500 per month), and $1,200 / $1.13 = 1,062 shares ($100 per month).

Note that dividend yield can change on a rolling basis, as the dividend payment and the stock price both fluctuate over time.

How that works: The dividend yield is computed by dividing the annual dividend payment by the stock’s current price.

For example, if a stock pays an annual dividend of $2 and is currently priced at $50, the dividend yield would be 4% ($2/$50). However, if the stock price increases to $60, the dividend yield drops to 3.33% ($2/$60). Conversely, if the stock price falls to $40, the dividend yield rises to 5% ($2/$40).

Similarly, changes in the dividend payment can impact the yield. If a company increases its dividend, the yield will also increase, provided the stock price stays the same. Conversely, if the dividend payment decreases, so will the yield.

HRL Price Action: Shares of Hormel Foods fell 0.6% to close at $30.74 on Tuesday.

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