Key Takeaways
- Hershey yields 3.4% and Mondelez 3.3%, and both grew their dividends by more than 10% a year from fiscal 2020 to fiscal 2025.
- Over the latest twelve months, Hershey paid out 53% of its free cash flow as dividends, against 70% at Mondelez.
- Hershey’s earnings fell sharply in fiscal 2025 as cocoa costs soared, and its dividend didn’t rise that year.
- Watch whether Hershey’s earnings recovery holds up as consumers grow more cautious.
Hershey (HSY) and Mondelez International (MDLZ) reported third-quarter results on the same day, Oct. 29, and investors cheered only one of them.
Hershey beat estimates and raised its outlook for 2026 adjusted EPS to $8.58-$8.74. Its shares still slipped as investors weighed a sales volume drop of roughly 10%. The same day, it declared a quarterly dividend of $1.452 a share, unchanged from the last one.
Mondelez reaffirmed its 2026 outlook, and its stock closed up 4% the next day, near its 52-week high. With the two yielding about the same, which dividend has more cash behind it?
| Metric | Hershey (HSY) | Mondelez (MDLZ) |
|---|---|---|
| Dividend yield | 3.4% | 3.3% |
| Annual dividend | $5.81 | $2.08 |
| Dividend growth, fiscal 2020-2025 | 11.7% a year | 10.1% a year |
| Cash dividend payout ratio (TTM) | 53% | 70% |
| Net debt/EBITDA | 1.5x | 2.5x |
| Interest coverage | 11.7x | 10.6x |
| Forward P/E | 19x | 20x |
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Hershey’s cocoa hangover is easing
Hershey’s normalized EPS fell from $9.37 in fiscal 2024 to $6.31 in fiscal 2025 as cocoa costs soared. Its dividend didn’t rise that year. The third quarter of 2026 looked like the turn. Adjusted EPS jumped 103.1% from a year earlier to $2.64, and North America Confectionery’s segment income rose 66.2% on higher prices, productivity savings, tariff refunds and lower commodity costs. International was the weak spot: sales fell 7.5%, and the segment lost $30.0 million.
Free cash flow has covered the dividend in every fiscal year since 2016:
For a few years, raises outran cash, which lifted the cash dividend payout ratio from 43.2% in fiscal 2021 to 59.5% in fiscal 2025. Over the twelve months to Sept. 27, 2026, it eased to a well-covered 53%.
The risk is volume. As CEO Kirk Tanner said in the results release, “Our second-half demand creation initiatives are gaining momentum, even as consumers grow more cautious.”
Mondelez is handing over more of its cash
Mondelez buys the same cocoa, and its third quarter was solid too. Organic revenue grew 2.1%, adjusted EPS rose 5.5% in constant currency to $0.78, and gross margin climbed 1,260 basis points to 39.4%. Emerging markets did much of the work, with about 130,000 outlets added in India so far this year.
Its coverage has moved the other way from Hershey’s. Free cash flow slipped from $3.60 billion in fiscal 2023 to $3.24 billion in fiscal 2025, while dividends paid rose from $2.16 billion to $2.49 billion:
That pushed the cash dividend payout ratio from 57.5% in fiscal 2021 to a tight 76.9% in fiscal 2025. Over the twelve months to Sept. 30, 2026, it was 70%. Buybacks come on top of that: Mondelez returned $2.8 billion through dividends and buybacks in the first nine months of 2026.
The raises are slowing to match. The latest raise lifted the quarterly dividend 4% to $0.52 a share, paid Oct. 14, after an 8.4% rise in fiscal 2025. Mondelez also carries more debt, at 2.5x net debt to EBITDA against Hershey’s 1.5x. On Oct. 29, it agreed to buy Undercover Snacks, the kind of bolt-on deal CEO Dirk Van de Put calls its strategy.
So which dividend wins?
Hershey is the better dividend stock. It pays a slightly higher yield, keeps more of its free cash flow in reserve and carries less debt. Its earnings are also on the way back, and analysts expect normalized EPS to pass fiscal 2024’s level by fiscal 2027:
The consensus of $8.66 for fiscal 2026 sits inside management’s own guidance, and it climbs to $10.03 by fiscal 2028.
At each dividend’s five-year growth rate, $10,000 in Hershey pays $340 a year now and about $921 in year 10. That’s a 9.2% yield on the original cash. The same $10,000 in Mondelez pays $330 now and grows to about $783, or 7.8%.
Hershey’s pause is the catch. If its dividend stayed frozen while Mondelez kept its fiscal 2025 pace, Mondelez’s income would pass Hershey’s in 2027. But Hershey’s current rate of $5.81 a year is already above the $5.48 a share it paid in fiscal 2025, and a 53% payout leaves room for more.
Mondelez has the steadier record. It raised its dividend 8.4% in fiscal 2025, the year Hershey paused, and it grew its dividend 11.7% a year from fiscal 2015 to fiscal 2025, against Hershey’s 9.4%. It’s just that 70% of its free cash flow already goes out as dividends and its raises have slowed to 4%. I’d rather own the dividend with room to spare.
Of course, Hershey needs cocoa costs to keep easing and its volumes to steady for those estimates to hold.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
