Hershey (HSY): Dividend Stock Review

Introduction

As a dividend growth Investor, the best companies to invest in are quality companies that show a history of growing revenues and cash flow to enable them to increase their dividends over time. In addition, dividend increases act as a hedge against inflation as investors are technically getting a raise each year the company increases its dividend. Companies like Hershey (HSY) are known worldwide and appear on the surface to be quality companies. Indeed a good start, but before parting with hard-earned cash, it is always wise to carry out your due diligence on a company. This dividend stock review will look at the Hershey Company’s business units to see how it makes money and potential future catalysts.

As dividends come from cash to investors, the financial statements are critical to the due diligence process, with particular attention paid to the balance sheet and cash flow.

Hershey - Dividend Stock Review

Brief Introduction About Hershey

In 1984, Milton Hershey first introduced Hershey as a Lancaster caramel subsidiary under Hershey Chocolate Company. The company has grown to become the largest producer of chocolate and confectionery products in the United States. 

Besides chocolates, the company also bakes cakes and cookies, sell beverages such as milkshakes, and other products. Popular brands include Hershey’s, Reese’s, Kisses, Cadbury, Ice Breakers, Kit Kat, Almond Joy, Jolly Rancher, Twizzlers, Good’ n’ Plenty, Heath, Whoppers, and Milk Duds.

Hershey’s company headquarters is located in Hershey, Pennsylvania, and distributes its products all over the U.S. and more than 60 countries globally. The company has massive distribution centers, uses modern technology and industry management systems to run its processes and product production.

According to Warren Buffet, a tycoon, investor, and Berkshire Hathaway’s CEO, two significant rules should govern your investment, and they are;

  • Don’t lose money 
  • remember rule number one. 

Here’s a detailed overview of Hershey as a dividend stock to help me if it’s worth my investment.

Hershey Dividend Stock Review

Source: Hershey Investor Presentation

Hershey Recent Results and Growth

Hershey has been growing over the past years and recorded a solid showing to finish 2020. In Q4 2020, Hershey’s net sales improved by 5.7 %, amounting to $2.185 billion. 

Divestitures influence was a 0.4 points headwind for foreign exchange and 0.2 points for net sales. As a result, net income rose by 41.8%, $1.39 per share-diluted or a $291.4 million net income. 

Hershey also recorded a full year’s financial results summing to $8,149.7 million in net sales, a 2% increase. However, the divestitures and acquisition influence was a 0.5 points headwind for net sales and foreign currency exchange.  

The net income recorded was $1,278.7 million or $6.11 per share-diluted earnings per share, an 11.9% increase. The adjusted incomes were $6.29 per share-diluted, marking an 8.8% rise. 

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Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. We are not providing you with individual investment advice on this site. Please consult with ...

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