The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
The Hershey Company
(HSY - Get Report)
reported strong earnings at the end of last month. As a result, Hershey stock is up almost 2% in the last 30 days while the markets remain off about -6%, thanks to a volatile August.
So what's next for HSY stock and Hershey shareholders in September? It could be more sweet results for the chocolate and snack foods giant.
In its July 26 earnings report, Hershey reported second-quarter profit of 56 cents a share, up 10% from a year ago. Hershey earnings beat expectations by a penny a share, and marked the second straight quarter of double-digit profit growth at HSY.
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The company behind sweets like Kit Kat, Almond Joy and Reese's Pieces was aided by strong volume in the U.S. and abroad, as 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.
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Also, despite the July report that higher input costs were weighing on margins, it appears that 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 raise 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.
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On the dividends front, last Tuesday Hershey declared a quarterly dividend of 34.5 cents a 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 that you can believe in.
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To top it off, Hershey has also 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 approved another $250 million share repurchase program in late April.
Those are all great reasons to buy Hershey stock. Though HSY is up about 20% year to date despite struggles for the broader market, this may be a great addition to low-risk portfolios.
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
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