Tuesday, August 07, 2007

Hershey Foods Raises Dividend 10.2%

Ted Parrish, co-manager of the Henssler Equity Fund (HEQFX), recently conducted an interview with Chuck Jaffe of MarketWatch. In the interview Parrish noted:
"...looking for stocks that combine big, solid dividends with slow growth rates will achieve returns of 10% to 12% annually, regardless of the market's day-to-day volatility."
One of his recommendations in the interview was Hershey (HSY). I hope HSY gets into the slow growth on the upside in the near term. The company's stock price one year ago was $52 and it closed at $47 today.

Hershey announced a 10.2% increase in the company's quarterly dividend. The new quarterly dividend increases to 29.75 cents per share versus 27 cents per share in the same quarter last year. The payout ratio on 2008 estimated earnings of $2.44 is approximately 49%. The company has an S&P Quality Ranking of B+.

(click on table/graph for larger image)

Hershey dividend analysis. August 7, 2007
Hershey stock chart. August 7, 2007


Big Dividends, Slow Growth--that's the Ticket
August 3, 2007


Anonymous said...

Great dividend find. I think that rising dairy prices will continue to pressure Hershey's bottom line, but the dividend increase is a good sign that management feels growth is sustainable.

David Templeton, CFA said...


I agree that the increase is likely a sign by management and the board that maybe the worst is behind the company. The increase is nearly in line with the company's 5-year historical dividend growth rate of 11+%.