Hershey (HSY): A Tier Two Dividend Growth Stock

Some businesses don't need to reinvent themselves every decade.

They simply continue making products people love.

That's exactly what Hershey has been doing for well over a century.

Founded in 1894, Hershey has grown into one of the world's premier confectionery companies, producing iconic brands such as Hershey's, Reese's, Kit Kat (U.S.), Kisses, Twizzlers, Jolly Rancher, Ice Breakers, SkinnyPop, and Dot's Homestyle Pretzels. Its products can be found in grocery stores, convenience stores, vending machines, sporting events, movie theaters, and checkout lanes across the country.

The products may seem simple.

The business behind them is exceptional.

Key Statistics

• Ticker: HSY
• Tier: Tier Two
• Industry: Consumer Staples / Confectionery
• Market Capitalization: Approximately $37 billion+
• Consecutive Years of Dividend Increases: 0 years
• Dividend Aristocrat Status: No
• Dividend King Status: No

While Hershey isn't yet a Dividend Aristocrat, the company has quietly become one of the premier dividend growth companies in the consumer staples sector. Management has consistently rewarded shareholders with strong dividend increases while maintaining one of the most recognizable portfolios of brands in the food industry.

Why HSY Fits Tier Two

Within the DGI Crab framework, Tier Two is designed for investors who are building a bridge between growth and income.

The typical Tier Two target is a 3% starting dividend yield combined with approximately 6% to 7% annual dividend growth.

This is where investors begin placing greater emphasis on current income without sacrificing long-term compounding.

Hershey fits that philosophy beautifully.

Its dividend yield is typically higher than many Tier One companies, yet management has continued producing healthy dividend growth while steadily increasing the value of the business.

For investors in their 30s and early 40s, that's exactly the balance we're trying to achieve.

You aren't giving up growth.

You're simply asking your portfolio to begin contributing more income along the way.

The Power of Timeless Brands

One of the reasons I like Hershey so much is that its brands have become part of American culture.

Reese's. Hershey's Bars. Kisses. Twizzlers.

These aren't products people discover once.

They're products families buy generation after generation.

That kind of brand loyalty creates tremendous pricing power. Even when cocoa prices, sugar prices, or transportation costs increase, Hershey has historically been able to pass much of those higher costs on to consumers.

That's an enormous competitive advantage.

The company also continues expanding beyond chocolate through acquisitions in salty snacks and better-for-you products, helping diversify its revenue while staying focused on categories where it already excels.

Chocolate Is More Resilient Than You Think

One of my favorite things about Hershey is how resilient the business has proven to be.

People don't stop celebrating birthdays. They don't stop buying Halloween candy. They don't stop putting candy in Christmas stockings or Easter baskets.

And sometimes, they simply want a Reese's Peanut Butter Cup after a long day.

Those small purchases tend to hold up remarkably well through economic cycles.

When combined with Hershey's incredible brand recognition, nationwide distribution network, and disciplined management, you end up with a business that's capable of producing dependable cash flow year after year.

That's exactly the type of company I want occupying a Tier Two position.

Why It Belongs in Tier Two Instead of Tier Three

At first glance, some investors may wonder why Hershey isn't classified as a Tier Three stock.

After all, consumer staples are generally viewed as defensive investments.

The answer comes down to the balance between growth and income.

Tier Three investors generally seek companies offering a 4% to 5% starting yield combined with approximately 4% to 5% annual dividend growth. At that stage, dependable current income becomes the primary objective.

Hershey still leans more toward growth.

Its dividend yield is generally closer to the Tier Two target than Tier Three, while management has demonstrated an ability to grow the dividend at a faster pace than many mature consumer staples companies.

The business also continues creating shareholder value through earnings growth, disciplined acquisitions, and long-term share price appreciation.

For a Tier Two DGI Crabber, that's exactly what we're looking for.

A company that produces meaningful current income today while continuing to grow both the dividend and the underlying business for years to come.

Final Thoughts from the DGI Crab

Hershey isn't trying to become the next technology giant.

It doesn't need to.

It has spent more than a century building some of the strongest consumer brands in the world.

For a Tier Two DGI Crabber, Hershey represents the perfect balance of dependable income and continued growth. You receive a solid starting dividend. You benefit from years of dividend growth. And you own a business with brands that are likely to remain household names for decades to come.

Sometimes the sweetest investments are the simplest ones.

Hershey has been proving that for generations.