COST vs HRL: Dividend Yield, Growth & Safety Comparison
Costco Wholesale Corp /New (COST) and Hormel Foods Corp /De/ (HRL) are both in the Consumer Staples sector, making them natural rivals for dividend investors. HRL offers a significantly higher 4.77% yield compared to COST's 0.52%, a gap of 4.25%. For dividend growth, COST leads with a 5-year CAGR of 20.9% versus HRL's 12.1%. Both stocks carry a "Safe" dividend safety rating.
Key Metrics Comparison
| Metric | COST | HRL |
|---|
| Dividend Yield | 0.52% | 4.77% |
| Annual Dividend | $5.06 | $1.16 |
| 5-Year CAGR | 20.9% | 12.1% |
| Payout Ratio | 27% | 1% |
| Consecutive Years | 0 | 0 |
| Price | $1015.00 | $23.74 |
Yield Comparison
Hormel Foods Corp /De/ (HRL) currently yields 4.77%, which is attractive for the broader market. That's 4.25% more than Costco Wholesale Corp /New (COST), which yields 0.52%. In dollar terms, HRL pays $1.16/share annually versus COST's $5.06/share.
Dividend Growth
Over the past five years, COST has grown its dividend at a 20.9% CAGR compared to HRL's 12.1%. COST: Dividend growth is slowing — the 3-year CAGR of -47.1% trails the 5-year rate of 20.9% and the 10-year rate of 15.8%. HRL: Dividend growth is accelerating — the 3-year CAGR of 18.6% exceeds the 5-year rate of 12.1% and the 10-year rate of 11.5%.
Dividend Safety
COST's dividend safety is rated "Safe." The payout ratio of 27% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 3.7x. HRL's dividend safety is rated "Safe." The payout ratio of 1% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 0.8x. HRL's payout ratio of 1% is more conservative than COST's 27%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in HRL generates approximately $477/year in dividend income, compared to $52/year from COST — a difference of $425/year. At $100,000, that gap widens to $4250/year.
Verdict
- Best for income: HRL
- Best for growth: COST
- Best for safety: HRL
Frequently Asked Questions
Which has a higher dividend yield, COST or HRL?
Hormel Foods Corp /De/ (HRL) has a higher dividend yield of 4.77% compared to Costco Wholesale Corp /New (COST) at 0.52%.
Is COST or HRL a better dividend growth stock?
Costco Wholesale Corp /New has the stronger dividend growth with a 5-year CAGR of 20.9%, compared to Hormel Foods Corp /De/'s 12.1%.
Which is safer for dividend income, COST or HRL?
Costco Wholesale Corp /New's dividend safety is rated "Safe" while Hormel Foods Corp /De/ is rated "Safe." The payout ratio of 27% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 3.7x. The payout ratio of 1% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 0.8x.
How much income does $10,000 in COST vs HRL generate?
A $10,000 investment in COST generates approximately $52/year in dividends, while the same amount in HRL generates about $477/year.
Which has a lower payout ratio, COST or HRL?
Hormel Foods Corp /De/ has a lower payout ratio of 1% compared to Costco Wholesale Corp /New's 27%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
COST vs HRL: which is better for retirement income?
It depends on your priorities. HRL for current income, COST for dividend growth, HRL for safety. Many retirement investors hold both for diversification.
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