Investors Eye Dollar General and Hershey Amid High Dividend Yields

Investors are focusing on Dollar General and Hershey as both offer high dividend yields despite recent stock declines. Analysts believe these companies can overcome short-term challenges to maintain robust dividends over the long term.

Date: 20-03-2025

AI Rating: 5

Dollar General and Hershey's Financial Performance

According to the report, Dollar General is currently experiencing weak traffic trends and reported a significant decline in earnings per share (EPS), which fell 32% year over year. Even so, the company is maintaining a quarterly dividend of $0.59, which represents a forward yield of 2.96%. Meanwhile, Hershey also reported challenges, particularly with rising cocoa prices affecting profit margins, and saw adjusted earnings decrease by 2.3% in 2024. However, their sales still managed a slight increase of 0.3%.

While both companies are facing difficulties, they demonstrate a commitment to dividend payments. Dollar General's strong performance in same-store sales (up 1.4% in fiscal 2024) indicates resilience, although the company’s strategy to improve margins could become beneficial in the future. In Hershey's case, despite the dip in earnings tied to higher cocoa prices, they expect sales to continue growing, with projections of a 2% or higher increase in the coming year.

Potential for Future Growth

Dollar General’s management is projecting an increase in operating margin to at least 6% by 2028, signaling an optimistic outlook for earnings growth. On the other side, Hershey's strong international sales growth, particularly in regions like Europe and Australia, suggests a potential for recovery as commodity prices fluctuate.

The report underscores the notion that while both companies face present challenges, the strategies in place may allow them to navigate these headwinds successfully. This makes them an interesting prospect for investors, particularly those looking for reliable dividend stocks in turbulent times.

Stocks: DG HSY