| Stock | Price | 52 Week Range | Marketcap | EPS | Dividend Yield | Chart (24H) | Sector | Employees | Last Updated |
|---|---|---|---|---|---|---|---|---|---|
| $181.59 | 36.81B | 7.54 | 3.02% | Consumer Defensive | 18,540 | 14 hours ago | |||
| $994.57 | 441.07B | 17.60 | 0.52% | Consumer Defensive | 333,000 | 14 hours ago |
In the unpredictable world of stock markets, there’s one investment strategy that has consistently rewarded the patient investor: dividend growth investing. By focusing on companies that not only pay dividends but also consistently increase them, investors can enjoy a steady stream of income and potential capital appreciation. Today, we’re diving deep into two stellar picks that have shown remarkable dividend growth: **Hershey’s** and **Costco**. Let’s explore why these two companies should be on your radar.
Editor's Note: Analysis and insight for this article were originally sourced from our friends at The Motley Fool
The Hershey Company (HSY)
When you think of Hershey, the first thing that comes to mind might be its delicious chocolates. But for savvy investors, Hershey represents more than just sweet treats—it’s a steady stream of growing dividends. Here’s why this confectionery giant is a delectable choice for dividend enthusiasts.
Investment Appeal:
Dividend Growth: Hershey’s dividend growth story is truly compelling. With a five-year dividend growth rate of 11.9%, Hershey has demonstrated a strong commitment to returning value to its shareholders. This growth rate is not just a number; it indicates the company’s financial health and its ability to reward shareholders consistently.
Current Yield: Currently, Hershey offers a yield of 2.83%, making it particularly attractive for income-focused investors. Compare this to the meager yields available from bonds or savings accounts, and it’s easy to see why Hershey shines.
Valuation: Hershey trades at a forward price-to-earnings ratio of 20.2. In context, the S&P 500 trades at over 21 times forward earnings. Given Hershey’s solid brand and market presence, this valuation seems reasonable and suggests potential for stock price appreciation.
Financial Strength: Hershey’s longstanding presence in the confectionery market, coupled with its stable financial performance, underscores its status as a reliable dividend payer. The company’s resilience and robust balance sheet make it a safe bet for conservative investors.
Market Position and Outlook:
Brand Strength: Hershey is not just about chocolates. The company boasts iconic brands like Reese’s, Kit Kat, and more, securing a dominant market position in North America. Beyond its home turf, Hershey is also expanding its international footprint, a move that promises additional growth layers.
Future Projections: Wall Street analysts expect low single-digit revenue growth in 2024 and 2025, reflecting Hershey’s stable and reliable performance. The stock trades at just 18.4 times projected 2026 earnings, marking it as a potential value buy considering its market stability.
Analyst Ratings and Forecasts:
To give you a fuller picture, let’s delve into what the experts are saying about Hershey’s stock.
| Category | Rating/Value |
| Consensus Rating | Overweight |
| Average Price Target | $184.13 |
| Potential Gain | 14.1% |
| Number of Ratings | 17 |
Summary of Analysts’ Outlook:
Analysts are generally bullish on Hershey Co., with a consensus rating of Overweight. The average price target of $184.13 suggests a potential gain of 14.1% from the current price. This optimism is likely driven by the company’s strong brand portfolio, solid financial performance, and growth initiatives.
Sources:
– Refinitiv
– TipRanks
– Yahoo Finance
Costco Wholesale Corporation (COST)
Think bulk shopping equals savings? How about bulk investing in a company that promises hefty returns? Enter Costco, the giant of the warehouse club world. For those willing to be patient, Costco offers tremendous long-term growth potential.
Investment Appeal:
Dividend Growth: Costco’s recent performance is nothing short of impressive, boasting a five-year dividend growth rate of 12.3%. This might seem modest compared to high-flying tech stocks, but it’s significant for a retail giant, indicating robust financial management and a commitment to shareholders.
Current Yield: While Costco’s current yield stands at a lower 0.57%, its consistent dividend hikes suggest strong future returns. Patience is key here; investors betting on Costco are likely to see substantial dividend income down the road.
Valuation: At a forward P/E ratio of 45.8, Costco might appear overvalued at first glance. However, considering its top-line forecast and business model, this premium valuation is well-justified. Investors seem willing to pay the price for Costco’s growth prospects.
Financial Strength: Costco’s warehouse club model, which emphasizes bulk purchasing and value for members, underpins its exceptional financial performance. The company’s strong balance sheet and operational efficiency make it a resilient player in the retail space, capable of withstanding economic downturns and outperforming during periods of growth.
Market Position and Outlook:
Business Model: Costco’s membership-only warehouse model drives loyalty and consistent revenue streams. High member retention rates and a unique shopping experience contribute to its competitive edge. This model ensures a steady inflow of cash from membership fees, which in turn supports the company’s aggressive pricing strategy and customer loyalty.
Future Projections: Analysts project that Costco will achieve 5.3% sales growth in 2024 and 7.3% in 2025, highlighting its strong growth trajectory. Continuous expansion plans, coupled with increasing membership and innovative service offerings, further enhance Costco’s long-term outlook.
Analyst Ratings and Forecasts:
Here’s an overview of what analysts are saying about Costco’s stock.
| Metric | Value |
| Consensus Rating | Overweight (Buy) |
| Average Price Target | $563.14 |
| Potential Gain | 14.1% |
| Number of Ratings | 24 |
Summary of Analysts’ Outlook:
Analysts have a positive outlook on Costco Wholesale Corporation, with a consensus rating of Overweight (Buy). The average price target of $563.14 suggests a potential gain of 14.1% from the current price. Most analysts believe that Costco’s strong business model, loyal customer base, and consistent sales growth will continue to drive its stock price higher.
Sources:
– Yahoo Finance: COST Analyst Estimates
– TipRanks: COST Analyst Ratings
– Refinitiv
Key Takeaways
Different Approaches: While Hershey and Costco are both dividend growth powerhouses, they offer different benefits.
Hershey: With a higher dividend yield and a moderate valuation, Hershey appeals to income-focused investors looking for stability with some growth prospects. Its solid market position and strong brand portfolio add to its allure.
Costco: Despite its lower yield, Costco’s robust growth potential makes it attractive for those prioritizing long-term capital appreciation. Its premium valuation reflects the market’s confidence in its future performance, underpinned by its solid business model and growth trajectory.
Investment Considerations: When deciding between Hershey and Costco, investors should weigh their income needs, growth expectations, and risk tolerance. Hershey is ideal for those seeking immediate income and moderate growth, while Costco suits investors aiming for substantial long-term returns through capital appreciation.
Whether you crave the stability and yield of Hershey or the exciting growth potential of Costco, these two stocks provide unique and attractive opportunities for long-term investors. Keep these powerhouses in your watchlist and give your portfolio the sweet treat and bulk-sized returns it deserves!