Over my long investing career, I have become a strong believer in the Dividend Yield Theory (DYT). DYT has been the source of many of my most successful investments and is now the main focus of my research. DYTTed Waller is a private investor who bought his first stock at age 13 (GTE) and has over 55 years of investing experience. His focus is on value and favorable risk/reward ratio, and special situations. Acquiring wealth is an incremental process that requires setting goals, adherence to principles, and ...

Investment Rating - The report indicates a solid total food sales growth of +2.8%/+3.2% year-over-year for the latest 4 weeks and 12 weeks, aligning with the long-term trend of low single-digit growth [1][6]. Core Insights - Total food sales growth is primarily driven by pricing, although there is a noted decline in volumes across most packaged food categories, with HSY being an exception due to pricing support [1][9]. - All companies within the coverage have lost market share in their top categories, indicating competitive pressures [1][10]. Department & Category Detail - Total food sales increased by +2.8% year-over-year in the latest 4 weeks, with private label products leading in most categories [2]. - Total equivalent (EQ) units decreased by -0.5% year-over-year, with branded products slightly outperforming private label products [2][5]. - Yogurt and packaged coffee showed the highest sales growth at +13.5% and +13.4% year-over-year, respectively, with private label sales growth strongest in snack/variety packs, meal combos, and packaged coffee [5][7]. Company Performance - CAG reported a sales decline of -1% year-over-year, driven by lower prices, while volumes remained flat [9]. - GIS experienced a -2% year-over-year sales decline, attributed to lower volumes [10]. - HSY saw a sales increase of +5% year-over-year, supported by higher prices and volumes [11]. - K reported a -3% year-over-year sales decline, primarily due to lower volumes [12]. - KHC's sales declined by -4% year-over-year, with lower volumes impacting performance [13]. - MDLZ reported a -1% year-over-year sales decline, driven by lower prices [14]. - SFD experienced a -1% year-over-year sales decline, although packaged lunchmeat showed strong growth [15].

Company Overview - The Hershey Company is an industry-leading snacks company generating over $11.2 billion in annual revenues, with a portfolio that includes iconic brands such as HERSHEY'S, Reese's, and Kit Kat® [6]. - Hershey operates in approximately 70 countries and employs more than 20,000 people worldwide [6]. Product Launch - The ONE x Hershey's Double Chocolate flavored protein bar is designed to meet the demand for convenient and nutritious snacks, combining real Hershey's cocoa and chocolate chips [1][2]. - This product aims to deliver a rich chocolate experience while catering to on-the-go lifestyles [1]. Marketing and Promotion - The launch is celebrated through a partnership with professional golfer Bryson DeChambeau, who endorses the product as a key part of his performance routine [2][3]. - The brand is initiating the "Double or ONEthing Challenge" to engage fans and promote the product, encouraging participation during a major golf championship [3][4]. Availability - The ONE x Hershey's Double Chocolate flavored protein bar is currently available in select markets, with plans for nationwide availability soon [5].

Film Production - Dandelion Media and Hershey Entities announced the full cast of the feature film "HERSHEY," which began principal photography on May 12, 2025, in Pittsburgh, Pennsylvania, and will continue through the end of June at various locations [1][2] - The film is directed by Mark Waters and stars Finn Wittrock as Milton Hershey and Alexandra Daddario as Catherine "Kitty" Hershey, with a supporting cast that includes notable actors such as Michael Moreland Milligan and Francesca Faridany [2][3] - "HERSHEY" is set to be released in 2026, coinciding with the 250th anniversary of the United States, and aims to depict the life and legacy of Milton Hershey, focusing on his contributions to education and community [4][8] Company Background - Dandelion Media, founded by Sharon Paul and Mark Tilghman, focuses on producing impactful films and television series, emphasizing risk-mitigated independent film financing and storytelling [9] - Hershey Entities encompass several organizations, including The Hershey Company and Milton Hershey School, all of which reflect Milton Hershey's philosophy of contributing to the happiness and well-being of others [10] - Aloe Entertainment, led by Mary Aloe, is recognized for producing and financing independent films, with a diverse slate of upcoming projects [11] Industry Context - The film industry is increasingly focusing on biographical stories that highlight the lives of influential figures, as seen in the production of "HERSHEY," which aims to inspire audiences through the narrative of Milton Hershey's journey from failure to success [4][8] - The collaboration between Dandelion Media and Hershey Entities illustrates a trend of partnerships between film production companies and established brands to create content that resonates with audiences while promoting brand legacy [1][10]

Group 1: Company Overview - The Hershey Company is a consumer staples company primarily focused on food production, particularly in the snack sector, with a strong emphasis on chocolate products like Hershey and Reese's [2][5] - Despite economic fluctuations, consumer staples companies like Hershey tend to be resilient, as chocolate is viewed as an affordable indulgence [4] Group 2: Current Challenges - Hershey's share price has declined over 40% from its 2023 highs, indicating a significant downturn for the company [1] - The company is facing challenges due to soaring cocoa prices, which are impacting profit margins, leading to an expected adjusted earnings drop of around 35% [5] Group 3: Long-term Growth Potential - The Hershey Trust, which has voting control of the company, takes a long-term investment approach, allowing Hershey to focus on future growth despite short-term market pressures [6][9] - High commodity prices, such as cocoa, typically resolve over time, and Hershey is expected to manage costs and gradually increase prices to restore margins [7] - Hershey continues to diversify its business by acquiring new brands, such as Sour Strips and LesserEvil, to expand its market reach [8] Group 4: Investment Opportunity - The current downturn in share price presents a buying opportunity for growth investors, as demand for Hershey's core products remains solid [10] - The decline in share price has resulted in a historically high dividend yield of 3.5%, making it an attractive option for income investors as well [10]

Group 1: Industry Overview - Consumer staples companies are considered safe-haven investments due to their consistent demand regardless of economic conditions [1] - The average consumer staples stock yields around 2.5% today, with PepsiCo and Hershey offering higher yields [13] Group 2: PepsiCo Analysis - PepsiCo is the leading company in salty snacks with its Frito-Lay brand and has a significant presence in packaged foods through Quaker Oats [2] - Currently, PepsiCo is experiencing cooling top-line growth after inflation-driven growth post-pandemic, and is facing changing snacking trends [4] - The company has a strong history of increasing dividends for 53 years, demonstrating resilience through adversity [5] - PepsiCo is actively working on cost-cutting, improving efficiencies, and adjusting product offerings, including acquisitions of on-trend brands like Siete and Poppi [6] - The company offers a historically high dividend yield of 4.4%, providing investors with compensation while waiting for recovery [7] Group 3: Hershey Analysis - Hershey is the U.S. leader in the confections space, known for its iconic brand and the Reese's franchise, with a dividend yield of approximately 3.4% [8] - The company is currently facing significant challenges due to rising cocoa prices, which are expected to impact margins [9] - Despite the cocoa price challenges, Hershey maintains a dominant market position and plans to grow through acquisitions in non-chocolate confection and salty snack sectors [10] - The Hershey Trust's control allows the company to focus on long-term growth and reliable dividends, aligning with investor interests for sustainable income [11] - Investors may consider waiting for Hershey to navigate current cocoa market challenges while benefiting from its dividend yield [12]

Core Viewpoint - Hershey faces significant challenges due to rising cocoa prices and supply shortages, leading to a stock decline of over 40% in the past two years, but there are reasons for optimism regarding its future performance [1][4][12] Group 1: Challenges Faced by Hershey - Cocoa prices have surged from below $2,000 per metric ton in fall 2022 to around $10,000 per metric ton currently, significantly impacting margins [4][5] - The majority of cocoa is produced in countries like Ivory Coast, where crop yields have been affected by disease and adverse weather, contributing to the price increase [5] - Hershey's candy sales in North America accounted for 82% of its revenue in Q1 2025, but net sales fell 14% to $2.8 billion during the same period [5][6] Group 2: Reasons for Optimism - Hershey projects a net sales gain of at least 2% for 2025, indicating customer loyalty despite high cocoa prices [8] - The top three cocoa producers reported a 20% increase in supply this season, providing some relief to Hershey [8] - Hershey has maintained a dividend of $5.48 per share, with a 3.4% yield, significantly higher than the S&P 500 average of 1.3%, and has increased its dividend for 15 consecutive years [9][10] Group 3: Financial Performance and Valuation - Despite challenges, Hershey generated over $1.9 billion in free cash flow in 2024, allowing it to sustain its dividend payments [10] - The stock trades at 20 times earnings, below its five-year average P/E ratio of 25, suggesting potential for recovery as cocoa shortages ease [11]

Core Insights - The article emphasizes the author's extensive experience in both equity and real estate markets, focusing on identifying long-only investment opportunities that provide safe and growing dividends [1] - The author has successfully sourced over $100 million in commercial real estate investments, showcasing a strong track record in the investment sector [1] - The background in economics and applied mathematics aids in providing timely analyses and strategies for enhancing investment portfolios [1] Company and Industry Summary - The author has a beneficial long position in the shares of HSY, indicating a positive outlook on the company's performance [1] - The article reflects a commitment to sharing insights on market evolution and investment opportunities, which may benefit investors seeking wealth creation [1]

Financial Data and Key Metrics Changes - The company expects net sales growth of at least 2% in 2025, aligning with its long-term growth algorithm [11] - The three-year cost savings target has been increased to $350 million from $300 million due to a transformation program aimed at operating more efficiently [15] Business Line Data and Key Metrics Changes - The acquisition of Lesser Evil is expected to enhance the company's presence in better-for-you snacking and extend offerings in ready-to-eat popcorn [3][4] - The company has introduced several new products, including Reese's Caramel and Shackalicious extra-large gummies, which have resonated well with consumers [19][20] Market Data and Key Metrics Changes - The company is actively monitoring tariff policies and optimizing its supply chain to mitigate the impact of tariffs on cocoa sourcing [13][14] - Elevated cocoa costs are being addressed through aggressive actions, including price increases on half of the US confection portfolio [15][16] Company Strategy and Development Direction - The company is focusing on innovation, expanding its chocolate variety brand portfolio, and enhancing seasonal execution to drive sales growth [11][12] - A partnership with VitaKey is being pursued to create a suite of health and wellness products, reflecting the ongoing health and wellness trends [10] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of product safety and quality, ensuring compliance with regulations while adapting to consumer behavior changes [6][9] - The leadership team is committed to maximizing value creation through bold actions and organizational changes [24] Other Important Information - The company has a proactive approach to product changes in anticipation of regulatory developments, maintaining consumer trust [8] - The upcoming film about Milton Hershey is set to be released in 2026, highlighting the company's commitment to social good [21][22] Q&A Session Summary Question: Why is the CEO and named executive officer compensation considered fair? - The compensation is aligned with performance, with 89% of CEO pay and 78% of named executive officer pay at risk, and the entire board approves the package [1][2] Question: What is the strategy behind acquiring Lesser Evil? - The acquisition aims to expand the company's presence in better-for-you snacking and complement its salty portfolio [3][4] Question: How is the company addressing recent regulatory changes regarding food dyes? - The company prioritizes product safety and compliance, actively monitoring regulatory developments [6][8] Question: How is the company adapting to health and wellness trends? - The company is adjusting its product portfolio to include low sugar and high protein options, reflecting consumer preferences [9][10] Question: What new strategies are being implemented for growth after a challenging 2020? - The strategy includes a focus on innovation, broadening investments in chocolate, and driving seasonal execution [11][12] Question: What impact do tariffs have on the business? - The company is closely monitoring tariff policies and optimizing its supply chain to mitigate impacts, particularly on cocoa sourcing [13][14] Question: How is the company managing elevated cocoa costs? - Aggressive actions are being taken, including price increases and a transformation program to enhance efficiency [15][16] Question: What new products can consumers expect? - New products include various innovative flavors and partnerships, with more exciting launches planned for the year [19][20]

Group 1: Consumer Sentiment and Spending - The Trump tariff policy has severely impacted consumer confidence in the U.S., particularly among middle and low-income groups, leading to reduced spending [1] - Companies that primarily target middle-class consumers, such as McDonald's, General Motors, Harley-Davidson, and Hershey, are experiencing declining sales and profit pressures [1] - McDonald's reported its lowest sales in mature U.S. restaurants since the pandemic, attributing this to cautious spending by lower-income customers [1] Group 2: Automotive Industry Impact - Harley-Davidson's motorcycle sales fell by 24% year-over-year, with the CEO citing economic uncertainty and high interest rates as key factors [2] - General Motors, despite initial sales growth, has lowered its annual profit forecast by $2 billion to $3 billion due to tariff costs of $4 billion to $5 billion [2] - GM plans to increase North American prices by up to 1%, reversing an earlier expectation of a price decrease [2] Group 3: Confectionery Sector Challenges - Hershey reported a 15% decline in sales of candy, mints, and gum, with executives noting a growing consumer focus on value [3] - The company anticipates a loss of $15 million to $20 million in the current quarter due to tariffs on key raw materials like cocoa, which cannot be grown domestically [3] Group 4: Technology Sector Performance - Apple reported strong second-quarter sales driven by increased iPhone demand, potentially due to panic buying before new tariffs took effect [4] - Analysts warn that ongoing economic uncertainty poses real risks to both domestic and global economies, with signs of declining business and consumer confidence [4]