Tag Archives: Tyson Foods

Business, Finance, Occupation & Industry

How Hormel Keeps Serving Up Strong Dividends

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By Dan Caplinger, The Motley Fool

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Investors have always been interested in stocks that pay dividends, but lately, low interest rates on bonds and other fixed-income investments have made solid dividend payers even more valuable. Among the most promising dividend stocks in the market is Hormel Foods , and one big reason is that it is one of the few exclusive companies to make the list of Dividend Aristocrats.

In order to become a member of this elite group, a company must have raised its dividend payouts to shareholders every single year for at least a quarter-century. Only a few dozen stocks manage to make the cut, and those that do tend to stay there for a long time.

Hormel is famous for Spam, but it offers a full line of meat and other food products, ranging from Chi-Chi’s salsa and tortillas to Dinty Moore beef stew. Like many consumer-oriented businesses, Hormel has built up a reliable customer base that gives it a dependable and predictable flow of cash that it can then funnel out to shareholders. Let’s take a closer look at Hormel to see whether it can sustain its long streak of rewarding dividend payouts to investors.

Dividend Stats on Hormel

 

  

Current Quarterly Dividend Per Share

$0.17

Current Yield

1.7%

Number of Consecutive Years With Dividend Increases

47 years

Payout Ratio

33%

Last Increase

January 2013

Source: Yahoo! Finance. Last increase refers to ex-dividend date.

What’s happening at Hormel?
Hormel has done a good job of handling the challenges it has faced recently. Despite pressures from high feed costs resulting from last summer’s drought, its most recent quarterly results included a 1% gain in net income on a 4% increase in revenue. Moreover, the company boosted its full-year guidance by $0.03 per share, citing improving margins in its pork segment and continued strong performance from its Grocery Products division. Even though grocery products represent a small piece of Hormel’s business, it’s becoming increasingly important, as the recent split of Kraft Foods has created more urgency among competitors like Hormel to defend their turf and seek ways to expand.

Along those lines, the biggest recent news from Hormel came at the beginning of the year, when it announced it would buy the Skippy peanut butter brand from Unilever for $700 million. Somewhat surprisingly, Skippy is a major player not just in the U.S. but in China as well, where it’s the No. 1 peanut butter brand. As a result, the deal helps bolster Hormel’s attempts to expand internationally, and investors have applauded it as the stock that has risen almost 30% in response.

But the key for Hormel remains pork, which still represents the bulk of its business. That industry has seen mixed results lately, as domestic pork consumption has been weak but exports have kept the business growing. Tyson Foods relies more on chicken than pork, but its pork

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

An Easy Way to Zero In on the Growing Large- and Mid-Cap Markets

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By Selena Maranjian, The Motley Fool

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Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you’d like to add some sizable companies to your portfolio, the Guggenheim Russell 1000 Equal Weight ETF could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously. It weights its holdings equally, instead of by market cap, as many indexes do.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Guggenheim ETF‘s expense ratio — its annual fee — is a relatively low 0.42%. The fund is fairly small, too, so if you’re thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF is too young to have a sufficient track record to assess. As with most investments, of course, we can’t expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why large companies?
Large companies can add some ballast to your collection. Many may not grow as briskly as their smaller counterparts, but to reach their current size, they probably have some strong assets and features. And some can grow quite briskly, too. This ETF focuses on ones that seem undervalued according to some measures, which can boost the overall margin of safety for the basket.

More than a handful of large- and mid-cap companies had solid performances over the past year. Walgreen surged 41%, finally moving on from its now-resolved snit with pharmacy benefits manager Express Scripts. Its pharmacy volume is picking up, and it has invested heavily in international growth, via a purchase of Europe-based Alliance Boots. It has also entered into a promising alliance with U.S. drug wholesaler AmerisourceBergen.

Tyson Foods gained 25%, recently hitting a 52-week high despite margin compression due to rising prices. It also may be affected by Washington’s sequester, which is furloughing USDA meat inspectors, which can slow down business — though Tyson isn’t too worried about that. Management is bullish for its longer-term prospects, and Tyson’s forward P/E ratio of 9 is intriguing.

Other companies didn’t do as well last year but could see their fortunes change in the coming years. Food giant Archer Daniels Midland gained 5%, but some analysts, such as those at BMO Capital Markets, see it as a bit overvalued now; BMO cut its rating to market perform. The company recently raised its dividend by 9%, and it now yields 2.3%. In February, it posted strong second-quarter results, despite weak corn processing numbers.

A market darling not so long ago, Green Mountain Coffee Roasters added 3%. Investors have been worried about the patent expiration for its K-Cups, but the company has continued signing big …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

This Is One Incredible CEO

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By Sean Williams, The Motley Fool

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The Motley Fool’s readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I’ve decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here is last week’s selection.

This week, we’ll turn our attention to the first female CEO to ever take the helm of food giant Campbell Soup , Denise Morrison.

Kudos to you, Ms. Morrison
It’s both an exciting and scary time to be a food producer. The exciting part stems from the sheer number of deals we’ve seen over the past year that are consolidating a generally slow-growth sector. Ketchup maker Heinz agreed to a $23.2 billion buyout last month led by Warren Buffett’s Berkshire Hathaway and Brazilian private equity firm 3G Capital. Considering the tight range Heinz had been trading in, and the slow but steady growth experienced by shareholders, the immediate 20% premium was gladly welcomed.

Another great example is Kellogg which picked up the Pringles brand from Procter & Gamble after its sale with Diamond Foods fell through. After lowering its outlook twice in 2012, Kellogg’s latest quarterly report demonstrated that Pringles sales kicked in 5% domestic growth and 1% overseas, helping to boost results past Wall Street‘s expectations.

On the other hand, inflation costs continue to rear their head in nearly every facet of food production. In fruits and vegetables, Dole Food disappointed investors in early January when it offered a full-year EPS forecast that was below the Street’s projections. Dole blamed the shortfall on ongoing contract negotiations as well as rising banana costs. Meat producers have shared similar woes, with Tyson Foods commenting at the Goldman Sachs annual agribusiness conference that its second quarter has been “challenging.” Margin compression from its pork and beef business caused by rising livestock feed prices, compounded with an expected USDA meat inspector furlough, which will slow production as a direct result of federal budget cuts, isn’t giving shareholders much to sink their teeth into.

Luckily for Campbell’s shareholders, Morrison’s company has walked this fine line with success — relying on its steady cash cow that is the soup business while also conservatively introducing new products to target younger age groups.

Campbell’s success lies in the fact that it controls approximately 60% of all soup market share. While a steady business, consumers also don’t tend to consume that much more soup each year, leaving cost-cutting, price increases, and overseas expansion as its primary growth driver in the soup arena. In its recently concluded second quarter, Campbell’s noted that it was able to grow its U.S. soup business despite lower ad spending thanks to its brand-building efforts over the years. Simply put, Morrison understands that with higher taxes come smaller discretionary budgets, which take big price increases off the table unless you want to completely scare away …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

How Sequestration Will Affect the Health-Care Sector and Your Pocketbook

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By Sean Williams, The Motley Fool

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Stop me if you’ve heard this joke before: “Two political parties walk into a bar; both point the finger at each other for the country’s fiscal mess, yet neither is willing to budge an inch from their underlying views…” My guess is you’ve heard this one all too often and it’s not even funny anymore… because the truth rarely is.

The highly anticipated sequestration, aimed at removing $1.1 trillion out of the federal budget over the next decade, kicked into effect on March 1, and is set to gradually, but decisively, remove $85 billion from the federal budget. These cuts are going to come from all walks of government – from USDA inspectors, to military spending, and even entitlement programs like Medicare, which is expected to see approximately a 2% reduction in reimbursements.  

Today, I want to take a closer look at how sequestration could impact the health care sector.

As you might imagine, many of the effects of removing government funding tend to be negative — but it’s not as cut-and-dried as it might appear on the surface.

How it’ll affect safety
The most immediate impact of sequestration appears to be whether patient and consumer safety will be affected negatively. On the surface I’d say this is a distinct possibility with the Centers for Disease Control and Prevention seeing nearly a $450 million cut in its budget and the FDA, whose expenses are predominantly tied to its personnel costs, alluding that a $318 million reduction in funds will result in layoffs or furloughs totaling 2,100 USDA food inspectors.

Food safety looks like a clear loser with Tyson Foods and Smithfield Foods projected to suffer from USDA furloughs. By law, processed meat cannot be sold in stores without having been inspected, leaving Tyson and Smithfield in a big bind come the summer time when these furloughs are expected to hit the hardest. The end result may be less meat on supermarket shelves and higher prices because of it.

The bigger concern here actually stems from the CDC‘s reduced budget. As GlobalData analysts noted this past week, one of the CDC‘s primary functions is to provide educational and preventative materials and products to curb the spread of infectious diseases such as hepatitis and HIV. A lack of funding here could result in higher occurrences of these infectious diseases. However, I disagree with their analysis that this negative occurrence could have the hidden benefit of driving down costs as providers opt for cheaper drugs in the HIV space, hurting the launch of expensive new offerings like . Gilead Sciences‘   four-in-one HIV medication, Stribild. Made with all in-house compounds, if Stribild supplants Gilead’s current best-selling HIV treatment, Atripla, it will result in higher margins for the company. Keeping things in perspective, I wouldn’t expect a huge spike in HIV occurrences, but I wouldn’t be surprised if documented cases rose year-over-year.

How it’ll affect research and development
Research …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Top Buys by Directors: Kever's $233.7K Bet on TSN

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By DividendChannel.com

The directors of a company tend to have a unique inside view into the business, so when directors make major buys, investors are wise to take notice. Presumably the only reason a director of a company would choose to take their hard-earned cash and use it to buy stock in the open market, is that they expect to make money ? maybe they find the stock very undervalued, or maybe they see exciting progress within the company, or maybe both. So in this series we look at the largest insider buys by company directors over the trailing six month period, one of which was a total of $233.7K by Jim D. Kever, Director at Tyson Foods, Inc. (NYSE: TSN). …read more
Source: FULL ARTICLE at Forbes Markets