Long-term Dividends for the Sweet Tooth: Hershey's (HSY)

Sports agents are prone to giving some bad advice - just look at what happened to Wayne Rooney at Manchester United. However, this piece of advice is well-worth listening to.

Manchester United striker Wayne Rooney has been getting a lot of bad advice from his agent recently which has seen him have to eat humble pie and apologize to his team-mates. While he hasn't covered himself in glory from a professional perspective, he has managed to secure himself a salary estimated to be around $1.6 million a month.
 
While it does amount to a lot of money, the career of a professional soccer player is often short-lived and after having given a big portion of your life to the game, you will need to have some consistent dividends to see you into retirement.
 
With that in mind, it’s important to find a good dividend stock that will help Wayne retire comfortably and still enjoy the finer things in life.
 
For this reason, let’s consider the Hershey Company (HSY) which offers investors a yield of 2.5%.
 
The Hershey Company (HSY) is the largest producer of quality chocolate in North America and a global leader in chocolate and sugar confectionery, employs more than 12,000 people and has revenues in excess of $5bn. Some of its world-class brands include Hershey’s, Reese’s, Hershey’s Kisses, Kit Kat, Twizzlers, Ice Breakers and Hershey’s Bliss.
 
In October this year, Hershey (HSY) declared its 324th consecutive quarterly dividend when management confirmed a third quarter distribution of $0.32 and since 1947 there have been six stock splits. The most recent split was in June 2004.
 
The company recently declared third quarter earnings with net sales coming in at $1.54bn compared with $1.48bn for the third quarter of 2009. Net income for the third quarter of 2010 was $180m or $0.78 per share, compared with $162m or $0.71 per share-diluted, for the comparable period of 2009.
 
While global economic uncertainty and challenges persist, confectionery remains one of the better-performing snack categories. In the third quarter, Hershey's net sales increased 4.2 percent, driven primarily by U.S. core brand volume growth, including new products, and growth in the emerging market businesses, which continues to increase at rates greater than the Company's overall long-term target.
 
Rooneys birthday falls on the October 24th, and if he had used 1% of his salary to buy Hershey (HSY) stock every year since he turned 18 he would now have around 34,000 Hersheys (HSY) shares valued in excess of $1.7m. Apart from the capital gains he would have enjoyed, there would also be around $42,500 in dividends coming in each year.
 
Hershey’s is growing sales and improving margins despite macroeconomic challenges. The financial and marketplace performance has enabled the company to be flexible in the timing of further investments in the fourth quarter related to advertising, Insights Driven Performance and additional go-to-market strategies in both the U.S. and other markets around the world.
 
With the confectionery market staying strong over 2010 and a long-term track record of paying dividends, Hershey (HSY) could provide a sweet spot for dividend investors in the long run.

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