HRL vs PEP: Dividend Yield, Growth & Safety Comparison
Hormel Foods Corp /De/ (HRL) and Pepsico Inc (PEP) are both in the Consumer Staples sector, making them natural rivals for dividend investors. HRL offers a significantly higher 4.77% yield compared to PEP's 3.37%, a gap of 1.41%. For dividend growth, HRL leads with a 5-year CAGR of 12.1% versus PEP's 7.3%. HRL holds the edge in dividend safety with a "Safe" rating. PEP is a Dividend Aristocrat with 27 years of consecutive increases.
Key Metrics Comparison
| Metric | HRL | PEP |
|---|
| Dividend Yield | 4.77% | 3.37% |
| Annual Dividend | $1.16 | $5.62 |
| 5-Year CAGR | 12.1% | 7.3% |
| Payout Ratio | 1% | 94% |
| Consecutive Years | 0 | 27 |
| Price | $23.74 | $166.01 |
Yield Comparison
Hormel Foods Corp /De/ (HRL) currently yields 4.77%, which is attractive for the broader market. That's 1.41% more than Pepsico Inc (PEP), which yields 3.37%. In dollar terms, HRL pays $1.16/share annually versus PEP's $5.62/share.
Dividend Growth
Over the past five years, HRL has grown its dividend at a 12.1% CAGR compared to PEP's 7.3%. 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%. PEP: Dividend growth is slowing — the 3-year CAGR of 6.6% trails the 5-year rate of 7.3% and the 10-year rate of 7.4%.
Dividend Safety
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. PEP's dividend safety is rated "At Risk." The payout ratio of 94% is elevated, which may indicate the dividend could be cut if earnings decline. Earnings cover the dividend 1.1x. HRL's payout ratio of 1% is more conservative than PEP's 94%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in HRL generates approximately $477/year in dividend income, compared to $337/year from PEP — a difference of $140/year. At $100,000, that gap widens to $1400/year.
Verdict
- Best for income: HRL
- Best for growth: HRL
- Best for safety: HRL
Frequently Asked Questions
Which has a higher dividend yield, HRL or PEP?
Hormel Foods Corp /De/ (HRL) has a higher dividend yield of 4.77% compared to Pepsico Inc (PEP) at 3.37%.
Is HRL or PEP a better dividend growth stock?
Hormel Foods Corp /De/ has the stronger dividend growth with a 5-year CAGR of 12.1%, compared to Pepsico Inc's 7.3%.
Which is safer for dividend income, HRL or PEP?
Hormel Foods Corp /De/'s dividend safety is rated "Safe" while Pepsico Inc is rated "At Risk." The payout ratio of 1% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 0.8x. The payout ratio of 94% is elevated, which may indicate the dividend could be cut if earnings decline. Earnings cover the dividend 1.1x.
How much income does $10,000 in HRL vs PEP generate?
A $10,000 investment in HRL generates approximately $477/year in dividends, while the same amount in PEP generates about $337/year.
Is HRL or PEP a Dividend Aristocrat?
Pepsico Inc is a Dividend Aristocrat with 27 consecutive years of increases. Hormel Foods Corp /De/ does not currently qualify for aristocrat status.
Which has a lower payout ratio, HRL or PEP?
Hormel Foods Corp /De/ has a lower payout ratio of 1% compared to Pepsico Inc's 94%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
HRL vs PEP: which is better for retirement income?
It depends on your priorities. HRL for current income, HRL for dividend growth, HRL for safety. Many retirement investors hold both for diversification.
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