The Hershey Company (NYSE:HSY) has seen its stock price fall approximately 30% from its high, influenced by concerns that new diet drugs could alter consumer behavior. This decline has subsequently increased its dividend yield to an attractive 2.4%. Investors looking for stability in dividend income may find reassurance in Hershey's unique ownership structure. The Hershey Trust holds nearly all Class B shares, which carry ten times the voting power of common shares, granting it about an 80% influence over shareholder votes. This concentration of control suggests that any major corporate decisions, including potential buyouts, would require the Trust's approval.
The dividends paid by Hershey are crucial to the Hershey Trust's charitable activities, aligning shareholder interests with those seeking reliable dividend growth. This is highlighted by Hershey's impressive record of consecutive annual dividend increases over the past fourteen years. While the Trust has faced internal disputes and issues like insider trading have been raised in disclosure policies, these have not significantly affected corporate governance due to the Trust's reliance on dividend income.
InvestingPro Insights
In the context of The Hershey Company's (NYSE:HSY) recent stock price decline, real-time data and InvestingPro Tips provide a deeper look into the company's financial health and investment potential. With a market capitalization of $39.18 billion and a trailing twelve-month P/E ratio as of Q3 2023 of 18.58, Hershey is trading at a valuation that balances its earnings growth. The PEG ratio during the same period stands at 0.97, suggesting that the stock price is in line with expected earnings growth rates. Furthermore, Hershey's revenue growth of 10.57% over the last twelve months indicates a resilient business model, even as concerns about changing consumer behavior loom.
InvestingPro Tips highlight that Hershey has a perfect Piotroski Score of 9, demonstrating strong financial health, and it yields a high return on invested capital. Additionally, the company has consistently increased its earnings per share and has raised its dividend for an impressive 53 consecutive years. These factors, combined with a dividend yield of 2.49% as of November 2023, underscore Hershey's attractiveness to investors seeking steady income.
For those considering adding Hershey to their portfolios, InvestingPro offers further insights and tips, with a total of 17 additional tips available to subscribers. During the special Black Friday sale, investors can access these valuable tips with a discount of up to 55% off the InvestingPro subscription, providing an opportune moment to gain comprehensive investment analysis and data.
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