Smoke & Mirrors: Or, Why Not to Bet the Farm on Habit

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The lure of Altria (MO 0.72%) is, shall we say, statistically improbable. A 6.3% yield, in this day and age, is less a return on investment and more a desperate plea from the universe to reconsider your life choices. It’s like finding a five-pound note in a discarded raincoat – momentarily pleasing, but ultimately raising more questions than answers. The yield itself isn’t the problem, of course. It’s what’s propping it up that gives one pause. (Which, incidentally, is the universally accepted posture when contemplating the long-term viability of businesses predicated on the voluntary reduction of lifespan.)

If you’re the sort of investor who enjoys a high-yield gamble – and let’s be honest, most of us are, deep down – you might find Hormel Foods (HRL +1.79%), with its roughly 5% yield, a marginally less terrifying proposition. It’s the difference between betting on a slightly dented roulette wheel and one that’s actively on fire. Both are statistically unlikely to end well, but one offers a marginally more dignified path to ruin.

The Problem with Altria

Altria has a dividend. A reliably increasing dividend, no less. This is impressive, in a way. It’s like a particularly stubborn weed refusing to acknowledge the impending winter. However, the core business remains stubbornly, almost poetically, dedicated to the production of something that actively encourages its customers to… not be customers anymore. It’s a business model so elegantly self-destructive, it almost deserves a Nobel Prize. (Though, admittedly, awarding a Nobel Prize to a tobacco company might cause a slight diplomatic incident.) The fact that it’s classified as a ‘consumer staple’ is… optimistic, to say the least. Staple to what, exactly? The grim inevitability of mortality?

They’ve been employing the time-honored techniques of price increases and stock buybacks to maintain the illusion of growth. It’s a bit like rearranging the deck chairs on the Titanic, but hey, at least the deck chairs look nice. It allows for those ongoing dividend increases, yes, but it doesn’t fundamentally address the fact that fewer and fewer people are voluntarily inhaling smoke. (A trend most sensible observers predicted, incidentally.)

Hormel Has a Yield and a Turnaround Plan

Hormel, meanwhile, is facing challenges of its own, but they’re of a different order of magnitude. It’s a large food manufacturer, specializing in protein products – meat, nuts, that sort of thing. Which, in a world increasingly obsessed with wellness and artisanal kale smoothies, is… reasonably aligned with current consumer trends. (Though one suspects the Venn diagram of ‘Hormel consumers’ and ‘artisanal kale smoothie enthusiasts’ is, shall we say, sparsely populated.)

They’ve been struggling to pass rising costs onto consumers. This is a common problem, of course. It’s the eternal struggle between businesses wanting to maximize profit and consumers wanting to, you know, actually afford things. Hormel’s solution? Refocusing on cost control and overhauling its portfolio. They’ve recently announced plans to sell their whole turkey business. (One suspects the turkeys are secretly relieved.)

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The goal is to focus on branded food products rather than commodity products. It’s a sensible strategy, really. It’s the difference between selling a slightly overpriced jar of peanut butter and competing in a race to the bottom for the cheapest possible chicken nugget. The company’s interim CEO, Jeff Ettinger, a respected veteran pulled out of retirement, is spearheading this effort. (One suspects he accepted the assignment because he was bored.)

His efforts have led to five consecutive quarters of organic sales growth. (Inclusive of preliminary results for Q1 2026. Dates, of course, are merely arbitrary constructs imposed upon the relentless march of entropy.) Essentially, the company appears to be… not actively sinking. Which, in the current climate, is a significant achievement.

Hormel is a Reliable Dividend Stock

Hormel’s 5% yield isn’t quite as eye-watering as Altria’s, but the business is fundamentally… less likely to spontaneously combust. And, just as importantly, Hormel has increased its dividend annually for over 50 years, earning it the coveted title of ‘Dividend King’. (A title, one suspects, largely meaningless in the grand scheme of things, but impressive nonetheless.) It demonstrates a firm commitment to returning value to investors via regular dividend increases. It’s a better all-around story than Altria, given the full risk/reward profile. Or, to put it another way, it’s a slightly less reckless way to lose your money.

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2026-02-21 14:22