The Hershey Co's Dividend Analysis
Insights into The Hershey Co's Upcoming Dividend and Its Sustainability
The Hershey Co (NYSE:HSY) recently announced a dividend of $1.37 per share, payable on 2024-03-15, with the ex-dividend date set for 2024-02-16. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into The Hershey Co's dividend performance and assess its sustainability.
What Does The Hershey Co Do?
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Hershey is a leading confectionery manufacturer in the U.S. (around a $25 billion market), controlling around 45% of the domestic chocolate space (per IRI, as cited by Hershey). Beyond its namesake label, the firm's mix has expanded over the last 85 years and now consists of 100 brands, including Reese's, Kit Kat, Kisses, and Ice Breakers. Hershey's products are sold in about 80 countries, albeit with just a high-single-digit percentage of sales coming from markets outside the U.S., including Brazil, India, and Mexico. The firm has sought inorganic opportunities to extend its reach beyond its core confection business, adding Amplify Snack Brands and its Skinny Pop ready-to-eat popcorn to its mix, Pirate Brands, and Dot's Pretzels over the past few years.
A Glimpse at The Hershey Co's Dividend History
The Hershey Co has maintained a consistent dividend payment record since 1986, with dividends currently distributed on a quarterly basis. The Hershey Co has increased its dividend each year since 1997, earning the prestigious title of a dividend aristocrat. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down The Hershey Co's Dividend Yield and Growth
As of today, The Hershey Co currently has a 12-month trailing dividend yield of 2.33% and a 12-month forward dividend yield of 2.90%, indicating an expectation of increased dividend payments over the next 12 months.
Over the past three years, The Hershey Co's annual dividend growth rate was 9.00%. Extended to a five-year horizon, this rate decreased to 8.30% per year, and over the past decade, The Hershey Co's annual dividends per share growth rate stands at 8.60%.
Based on The Hershey Co's dividend yield and five-year growth rate, the 5-year yield on cost of The Hershey Co stock as of today is approximately 3.47%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The Hershey Co's dividend payout ratio is 0.47 as of 2023-12-31, suggesting that the company retains a significant part of its earnings for future growth and unexpected downturns.
The Hershey Co's profitability rank of 9 out of 10, along with a decade-long track record of positive net income, indicates good profitability prospects and solidifies its ability to sustain dividend payments.
Growth Metrics: The Future Outlook
The Hershey Co's strong growth rank of 9 out of 10 and its robust revenue model, as evidenced by its revenue per share and growth rates, indicate a promising future. The company's revenue has increased by approximately 10.00% per year on average, outperforming approximately 61.55% of global competitors.
The Hershey Co's earnings have also seen a healthy increase, with a 3-year EPS growth rate of approximately 12.60% per year, outperforming around 56.1% of global competitors. Furthermore, the company's 5-year EBITDA growth rate of 12.70% outperforms approximately 64.78% of global competitors, demonstrating strong potential for continued dividend sustainability.
Concluding Thoughts on The Hershey Co's Dividend Prowess
In conclusion, The Hershey Co's consistent dividend payments, robust dividend growth rate, prudent payout ratio, and strong profitability and growth metrics paint a promising picture for value investors. These indicators suggest that the company is not only committed to returning value to shareholders through dividends but is also well-positioned to maintain and potentially increase these distributions in the future. As value investors consider their next steps, The Hershey Co stands out as a potential cornerstone in a dividend-focused portfolio. For those seeking high-dividend yield stocks, GuruFocus Premium provides a valuable resource with the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
