Hershey Co. (NYSE:HSY) reported strong earnings at the end of last month. As a result, Hershey stock is up almost 2% in the past 30 days while the markets remain off about 6% thanks to a volatile August.
Hershey stock has been a great low-risk investment recently, but what’s next for HSY? Well, if the numbers are any indication, there is even more success in store for Hershey.
In its July 26 earnings report, the company reported second-quarter profits of 56 cents per share, up 10% from a year ago. Hershey earnings beat expectations by a penny per share and tallied a second-straight quarter of double-digit profit growth.
The company behind sweets like Kit Kat, Almond Joy and Reese’s Pieces was aided by strong volume in the U.S. and abroad. Hershey sales climbed 7.5% to more than $1.32 billion. New snacks such as Reese’s Minis and Hershey’s Drops also helped the Hershey earnings report. This is strong growth that investors can believe in, as many companies are suffering on Wall Street.
Also, despite admitting that higher input costs were weighing on margins, it appears Hershey is successfully tackling the specter of inflation. HSY expects its full-year profit to rise 10% this year, above its previous guidance of 6% to 8%, thanks in part to a March move to increase prices by about 10% to help offset rising costs. What’s more, Credit Suisse believes Hershey is best positioned for high cost inflation as cocoa prices have declined, improving margins.
On the dividends front, last Tuesday, Hershey declared a quarterly dividend of 34.5 cents per share on its common stock. The dividend is payable Sept. 15 to shareholders of record and equals a 2.4% yield on current Hershey stock prices. HSY has paid dividends without interruption for 326 quarters, so this is a dividend stock you can believe in.
To top it off, Hershey also has returned cash to HSY shareholders through stock buybacks. During the first quarter, it bought back $100 million of its own stock as part of a $250 million share repurchase program. Hershey’s board also OK’d another $250 million share repurchase program in late April.
Those are all great reasons to buy Hershey stock. HSY is up about 20% year-to-date despite struggles for the broader market, and this might be a great addition to low-risk portfolios.
Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.
