Our analysis is based on comparing The Hershey Co. with the following peers – Mondelez International, Inc. Class A, Rocky Mountain Chocolate Factory, Inc., Hain Celestial Group, Inc., Snyder’s-Lance, Inc., John B. Sanfilippo & Son, Inc., General Mills, Inc., Nestle S.A. Sponsored ADR and Tootsie Roll Industries, Inc. Class B (MDLZ-US, RMCF-US, HAIN-US, LNCE-US, JBSS-US, GIS-US, NSRGY-US and TROLB-US).
Dividend Quality Overview
- Over the last twelve months (prior to September 30, 2016), HSY-US paid a medium quality dividend, which represents a yield of 2.24% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 3 were high quality, 1 was medium quality and 1 was low quality.
- The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
Quadrant label definitions. Hover to know more
Over the last twelve months (prior to September 30, 2016), HSY-US paid a medium quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 2.12x), investing cash flow (coverage of -1.28x), issuance cash flow (coverage of 0.16x) and twelve-month prior cash (coverage of 0.70x), for a total dividend coverage of 1.67x.
HSY-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -0.73x). Thus, the total coverage including share buybacks is 2.41x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s net cash inflow from issuance was required (in addition to operating and investment cash) to pay the dividend, which suggests a medium dividend quality.
|Dividend Yield (%)||2.24||2.17||1.81||1.97||2.52||2.28|
|Dividend Payout (%)||50.45||53.98||50.14||54.11||96.38||62.62|
A complete list of metrics and analysis is available on the company page.
The Hershey Co. produces chocolate and sugar confectionery products. It operates through the geographic regions of North America, and International and Other. The North America segment is responsible for the chocolate and sugar confectionery market position in the United States and Canada. This includes developing and growing its business in chocolate, sugar confectionery, refreshment, snack, pantry and food service product lines. The International and Other segment includes all other countries where it manufactures, imports, markets, sells or distributes chocolate, sugar confectionery and other products. Its products include chocolate and confectionery products, gum and mint refreshment products, and pantry items such as baking ingredients, toppings and beverages. Its brands include Hershey’s, Reese’s, and Kisses. The company was founded by Milton S. Hershey in 1894 and is headquartered in Hershey, PA.
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