Erin Lash: Hershey offers one of the more attractive dividends in the packaged foods space yielding north of 3%, and we think further growth is in the cards. Over the past year, Hershey has reined in its spending in international markets, which we view as prudent given we've long thought Hershey does not maintain a competitive edge relative to rivals that have played in these regions for decades.
Hershey is subsequently funneling that spend to support its leading brand mix in the U.S., where it controls north of 45% of U.S. chocolate. While private label threats are minimal in the confectionary aisle, Hershey is not immune to competitive headwinds from both other branded operators as well as other snacking alternatives. And as such, we view the increased investments behind research and development as well as marketing, which we forecast will average around 8% of sales annually over the next 10 years, as a means by which to support its leading brand portfolio, as well as its relationships with retail partners.
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Erin Lash does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.