COST vs HRL: Dividend Comparison
Dividend data as of
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.
Verdict
Yield Analysis
HRL yields 4.25% more than COST. In dollar terms, COST pays $5.06/share vs HRL's $1.16/share annually.
Dividend Growth
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: The payout ratio of 27% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 3.7x.
HRL: The payout ratio of 1% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 0.8x.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in COST vs HRL today?
At $1015.00 per share, $10,000 buys about 9.9 shares of Costco Wholesale Corp /New (COST). Each share pays $5.06 per year in dividends, so the position starts out generating roughly $50 per year — about $4 a month.
At $23.74 per share, $10,000 buys about 421.2 shares of Hormel Foods Corp /De/ (HRL). Each share pays $1.16 per year in dividends, so the position starts out generating roughly $489 per year — about $41 a month.
HRL is the larger income stream from day one: $439 per year more on the same $10,000 invested.
What could $10,000 of COST or HRL income look like in 10 years?
Costco Wholesale Corp /New (COST) has raised its dividend about 20.9% a year over the past five years. If that pace held, the $52 per year that $10,000 generates today at the current 0.52% yield would reach $347 per year by 2036 — a 3.5% yield on the original cost.
Hormel Foods Corp /De/ (HRL) has raised its dividend about 12.1% a year over the past five years. If that pace held, the $477 per year that $10,000 generates today at the current 4.77% yield would reach $1,493 per year by 2036 — a 14.9% yield on the original cost.
On those trailing rates, HRL pays more in 2036: $1,493 versus $347 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would COST's dividend growth overtake HRL's higher yield?
Costco Wholesale Corp /New (COST) yields less today (0.52% vs 4.77%) but has grown its dividend faster — 20.9% vs 12.1% a year over the past five years. If both trends continued, a $10,000 position in COST would start out-earning the same position in HRL around 2056 (roughly 30 years from now), paying about $15,398 per year at the crossover. Before that point, HRL pays more each year; after it, the gap compounds in COST's favor.
Can COST and HRL afford their dividends?
Costco Wholesale Corp /New (COST) earns $18.65 per share against $5.06 paid out in dividends — 3.7x coverage (a 27% payout ratio).
Hormel Foods Corp /De/ (HRL) earns $0.87 per share against $1.16 paid out in dividends — 0.8x coverage (a 1% payout ratio).
COST's wider coverage leaves more cushion if earnings dip. As a rule of thumb, coverage below about 1.5x (a payout ratio above ~65%) is where a dividend starts to look stretched — worth watching for HRL if earnings weaken.
Which fits an early-retirement income portfolio better, COST or HRL?
For income you need right now, Hormel Foods Corp /De/ (HRL) leads: $100,000 invested today pays about $398 a month at the current 4.77% yield, versus $43 a month from Costco Wholesale Corp /New (COST) at 0.52%.
With a decade or more before the income is needed, COST's faster dividend growth (20.9% vs 12.1% a year) matters more than the starting yield — raises compound into the larger paycheck over time.
Many income investors simply hold both — the mix pairs current yield with growth and spreads single-name risk. Whichever way you lean, dividends are never guaranteed; recheck the payout each quarter rather than setting and forgetting.
$10,000 with DRIP: projected annual income
If each holding keeps raising its dividend at its real 5-year rate and every payment is reinvested, a $10,000 position pays $366/yr in COST vs $2,380/yr in HRL by year 10.
Assumes dividends are reinvested at the current yield and grow at each holding's trailing 5-year dividend CAGR. A projection, not a prediction — no price appreciation modeled.
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