If I Could Only Buy and Hold a Single Stock, This Would Be It

Hershey is presented as a high-quality, brand-driven confectionery/snacks business whose long-term appeal rests on durable demand for affordable indulgences and alignment with The Hershey Trust, which controls most voting rights and favors steady dividends. The near-term risk is historically elevated cocoa prices, but management has pricing power to pass through costs; shares are down more than 40% from their 2023 highs, yield about 3.5% and the company delivered a 15% dividend increase in early 2024. The author recommends accumulating for patient, income-focused investors on the view that commodity headwinds are temporary and valuation/dividend metrics offer upside, while warning dividend growth may slow and disclosing he (and his firm) hold positions in Hershey.

Analysis

Hershey is characterized as a focused confectionery and snacks business with durable, affordable-demand dynamics anchored by iconic brands (Reese's, Hershey) and governance alignment via The Hershey Trust, which controls most voting rights and prioritizes steady dividends. The author highlights that this governance structure reduces corporate-risk of breakups and supports dividend continuity.

The primary near-term headwind is sharply elevated cocoa prices caused by an adverse supply-demand balance; the article describes current cocoa levels as "sky-high" and historically extreme. Management has pricing power and the company intends to pass cost increases to consumers, but the author cautions the pass-through will take time and that commodity pressure could slow dividend growth.

Valuation and income appeal drive the buy case: shares are down more than 40% from 2023 highs, the trailing dividend yield sits near 3.5% (multi-decade highs by the author’s account), and Hershey raised its dividend 15% at the start of 2024. The recommendation is a buy-and-hold for patient, income-focused investors while acknowledging potential multi-year muddling through and the author’s personal position in HSY.

Key Decisions for Investors

• Consider accumulating HSY on further weakness for long-term income exposure given the ~3.5% yield and >40% drawdown, but size positions assuming multi-year volatility and slower dividend growth
• Monitor cocoa price trends and upcoming management guidance closely; use a sustained downtrend in cocoa or clearer margin pass-through commentary as a catalyst to add to exposure
• If concerned about near-term commodity risk, limit position sizing or use hedges to protect capital while retaining dividend exposure, and reassess after sequential quarters of margin recovery