3 Reasons That Chocolate - Hershey's That Is - Makes a Great Gift
It is tough to go wrong with chocolate as a gift, especially when it is as appealing for investors as shares of Hershey's (NYSE: HSY), the venerable candy maker.
Right away, the dividend income from Hershey's is satisfying for the owner of the shares. The average dividend for a member of the S&P's 500 Index is around 1.9 percent. The dividend yield for Hershey's is just over 2 percent. Hershey's also has a history of dividend growth, which is pleasing for long-term shareholders. The dividend for Hershey's is also bigger than for others in the sector such as Tootsie Roll and Mondelez International.
The earnings outlook for Hershey's is bullish.
Earnings-per-share growth this year was just 5.50 percent. Over the next five years, it is expected to more than double to 10.55 percent. Even with the moderate earnings-per-share growth this year, Hershey's was still up more than 34 percent.
With a stock performance like that, it is obvious why Hershey's has such a low beta: there is no reason to sell!
A previous article on Benzinga discussed studies from Russell Investments that showed that low beta firms, those that do not fluctuate much in price, are the most rewarding for the long term. Shareholders do not sell as the stock performs so well there is no reason to part with it. The beta for Hershey's is just 0.22. That means that Hershey's stock price moves up and down about one-fifth as much as the stock market as a whole.
Hershey's is trading for around $96 a share.
RBC Capital Markets just initiated coverage with a buy recommendation and a target price of $110. With its low beta and high dividend, the shareholders of Hershey's could have the gift of a rewarding total return over the next year.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.