The Hershey Company Offers 2.4% Yield, Eight Years of Dividend Hikes (HSY)
By: Ned Piplovic,
The traditional American confectioner not only is offering tasty chocolates and candies but is rewarding its shareholders with a 2.4% dividend yield, while raising its dividend eight consecutive years.
In addition to nearly a decade of consecutive dividend hikes, the company has not cut its dividend payout in the last 20 years. Furthermore, the company’s share price rose 15% in the past 12 months to provide investors with significant asset appreciation and a 19.15% total return over the same one-year period.
The company’s next ex-dividend date occurs on November 17, 2017, and the pay date follows closely behind on December 15, 2017.
Hershey Company (The) (NYSE:HSY)
Founded in 1894 in Hershey, Pennsylvania, The Hershey Company manufactures and sells confectionery products. The company operates through two segments, North America, and International and Other. Among the company’s product offerings are chocolate and non-chocolate confectionery products, gum and mint refreshment products that include chewing gums, bubble gums, hard and soft fruit candy, lollipops and flavored soda. Additionally, the company manufactures pantry items, such as baking ingredients, toppings, beverages and sundae syrups, as well as and snack items, including spreads, meat snacks, bars and snack bites, and mixes. The company provides its products primarily under the Hershey’s, Reese’s, Kisses, Jolly Rancher, Almond Joy, Brookside, Cadbury, Good & Plenty, Kit Kat, Payday, Rolo, Twizzlers, Whoppers, York, Ice Breakers, Breathsavers, Bubble Yum and Heath brands. In addition to its confectionery operations, the Hershey Company operates an entertainment complex in Hershey that includes Hersheypark theme park, Hersheypark Stadium, Hersheypark Arena, Hershey Museum and the Giant Center arena.
The company’s current $0.656 quarterly dividend distribution converts to a $2.624 annual payout and yields 2.4%. This current yield is 8.4% above Hershey own 2.2% average yield over the past five years. Additionally, the company’s current yield excels in comparison to Hershey’s industry peers. Compared to the $2.08 average yield of all the companies in the Confectioners Industry segment, Hershey’s current yield stands 14.6% higher. Hershey’s current yield is also 35.5% above the 1.76% average yield of the Consumer Products sector average yield.
The company has rewarded investors with eight consecutive years of dividend hikes. Over that period, the annual dividend amount rose at an average rate of 10.4%. The result of these dividend hikes is a 121% total annual dividend boost since 2009.
Over the extended period of 20 years, the company failed to raise the annual dividend payout only once. Compared to the last eight years, the dividend grew at a slightly slower pace of 9.3% per year over the last two decades. However, the result of compounding dividend hikes over such an extended period resulted in a six-fold surge of the total annual dividend amount.
Excluding a 9% share price spike in May 2017, the share price rose at a steady pace over the past year from $95.65 on October 13, 2016, to $110.07, where it closed on October 13, 2017. After hitting its 52-week low of $95.12 on October 20, 2016, the share price reversed course and rose more than 11% by May 1, 2017. The share spiked an additional 9% by May 26, but relinquished all those gains and was back to $106 by the end of June 2017. Since The beginning of July, the share price has continued to rise at a slightly slower pace. The share price closed on October 13, 2016 at $110.07, which is just 5.1% below the 52-week high on May 26, 2017, and 15.1% higher than it was one year ago.
The Hershey Company more than doubled its annual dividend payout since it embarked on its current dividend hikes streak in 2009. Over the same period, the company tripled its share price. The combined effect of the rising dividends and the strong asset appreciation, rewarded the company’s shareholders with a 19.15% total return over the last 12 months, 26.25% over the three years and almost 75% over the last five years.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.