Friday, September 2, 2016

Keeping My Eye on Hershey

I'll be the first to say I was pissed when Mondelez(MDLZ) made a bid to buy Hershey's. I had been keeping a loose eye on the company for bit, and I was upset that I'd have to buy MDLZ if I wanted exposure.

I didn't like that idea because in my opinion Mondelez was making the offer to counter their falling sales the last few years. Hershey has done much better in handling the move towards healthier foods in American diets.  Surprisingly the fact that Hershey's
is mainly a candy company I think it has been better equipped to weather the turning tide.

It's not secret I like healthy food companies, as evidenced by WWAV and HAIN in the portfolio.  Hershey's is the antithesis of healthy food.  But candy is treated as, well, a treat. Mondelez on the other hand is known for more packaged and processed foods, with candy sales making up another sizeable chunk of the company.  It's the packaged goods that have been struggling of late as consumers switch to healthier versions.

When the offer was withdrawn I was probably some of the few excited about it.  Hershey's is a perfect stock for long haul investing.  No matter how much working out I do, or health conscious I become I still find myself indulging in the occasional Almond Joy, Reese, or York Peppermint.  Better yet is when I go camping it's just not the same without a s'more.  Although I don't always use Hershey chocolate it's the typical American standby and I don't see that changing. Ever.

The 11% drop is tempting, but I would like to add shares if they are cheaper. With a 2.5% dividend yield the stock is surprisingly yielding more than plenty of other stable, well known names. Crazy to see how low yields have become this year on good names. If I could get it closer to 2.7-3% I'd be more willing to take a dip into some chocolate love.

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