For over a century, Hershey was the kind of stock dividend investors would brag about owning… right before lecturing you on the power of tax-free municipal bonds. Founded in 1894 by Milton Hershey, a Pennsylvania Dutch entrepreneur who struck gold with caramel before shifting to chocolate (who knew?), the company built its name on two things: sugar and stability. Like most dividend stocks… you didn’t buy Hershey to get rich overnight. You bought it so your portfolio could nap peacefully while the rest of the market freaked out. But lately, that dependable sweetness has started to sour.

Over the past two years, Hershey stock has melted down more than 40% from its highs. And zooming in doesn’t help. It’s still down 6% over the last 12 months and barely clinging to a 1% gain in 2025. Now, before we go full Gordon Ramsay on them, let’s be fair: they’ve got one massive, semi-legitimate excuse… cocoa prices have gone absolutely off the rails.

To put it in perspective: cocoa was trading under $2,000 per metric ton in 2022 (the same time all our portfolios were down 20-30%). By early 2024, it had spiked past $12,000… yes, twelve-freaking-thousand. Today, it's still hovering around $10K, which is more than five times the average price just a few years ago. (At this rate, you’d think cocoa beans were handpicked by blindfolded monks riding alpacas through a rainforest.)

That kind of pricing pressure wrecks margins fast… especially for a company where 82% of revenue still comes from chocolate. Hershey tried the obvious move: raise prices. But there’s only so much you can charge for a bag of mini Kit Kats before people start doing the mental math and just... walk away. And walk they did. In Q1, net sales fell 14% year-over-year to $2.8 billion.

So now, Hershey’s doing something it hasn’t done in nearly a decade: bringing in new leadership. Starting August 18, Kirk Tanner (currently the CEO of Wendy’s) will take the reins. While it’s not as exciting as Zuck poaching Apple’s lead AI tech, this is a big move. After all, this is the guy whose most recent job involved managing Frosty machines and launching new nugget combos. But to his credit, Tanner is more than a burger guy. He previously led PepsiCo’s North American beverage division, which means he knows how to handle volatile commodity markets, shifting consumer preferences, and the logistical joyride that is running a national food brand.

(Source: Bloomberg)

While he gets settled, Hershey is trying to modernize its lineup. It’s acquired non-chocolate brands like Sour Strips and Weaver Popcorn and announced plans to eliminate artificial dyes from products by 2027… part of a broader industry shift in response to state-level bans and mounting regulatory pressure (aka RFK Jr. doing something that should’ve been done decades ago). Still, no matter how many healthy snacks they buy or how many dyes they remove, chocolate remains the main headliner… and chocolate ain’t cheap.

But it’s not all doom and gloom. Hershey is projecting at least 2% net sales growth this year, which suggests loyal customers haven’t bailed just yet. Cocoa supply is finally ticking up (up 20% this season in top-producing countries) which could cool prices if the trend holds. Meanwhile, the dividend remains rock solid at $5.48 per share, with a 3.4% yield… more than double the S&P 500 average. And despite paying out $1.1 billion in dividends last year, Hershey still cranked out $1.9 billion in free cash flow. Meaning: the passive income machine is alive and well (for now).

Valuation-wise, the stock trades at about 20x earnings… below its five-year average of 25x. So yeah, you’re not buying the next OpenAI, but you are picking up a recession-proof brand that’s suddenly on the clearance rack. That said, not everyone’s sold. Piper Sandler downgraded the stock to “underweight,” lowered their price target to $120 (current price is $171), and warned that cocoa inflation could stick around through 2026. If they’re right, this won’t be a quick bounce… it’ll be more of a long, slow chew.

So, what’s the move here? If you’re into value investing and have the patience to see when Cocoa prices get back to normal, Hershey might be worth a nibble. It’s a legacy brand with pricing power, loyal customers, and a dividend that could survive a minor apocalypse. The wildcard is Kirk Tanner… can he clean up the mess without getting chocolate on his suit?

Because if he can’t… well, don’t be surprised if more dividend dads quietly rotate out of Hershey and into more Nvidia shares.

At the time of publishing this article, Stocks.News holds positions in Pepsi-Co as mentioned in the article.