The Hershey Company (HSY 1.14%) makes many of the candy brands you find in any supermarket, but historically high cocoa prices are weighing on its business. Cocoa prices have nearly tripled since 2022, making candy more expensive to produce, which is cutting into Hershey’s profit. Hershey expects flat annual profit this year, and weak growth prospects have caused the stock to fall 28% from previous highs.

Nevertheless, Hershey is a profitable company that continues to pay dividends. The lower share price has pushed the dividend yield well above Hershey’s historical average yield of 2.15% and more than double S&P500 Average 1.32%. Here are three reasons to buy this great dividend stock now and hold it forever.

1. Hershey will get back on its feet

Although the rise in cocoa prices has had a negative impact on the business, management’s forecast suggests that Hershey will cope well in this environment.

Hershey reported a 16% year-over-year decline in second-quarter sales. However, excluding one-time items that impacted sales, management said its core business saw a low-single-digit sales decline, while international sales increased mid-single-digit.

Hershey expects full-year sales to increase about 2%, with adjusted earnings to decline slightly from 2023. The company sees underdeveloped sales channels such as e-commerce as an opportunity to drive sales growth, in addition to new products for Halloween and the holiday season that should boost sales in the near future.

2. The confectionery market will grow in the long term

The candy market is valued at $133 billion and is expected to grow by nearly 5% annually through 2029, according to Statista. Hershey owns several top brands that are growing with the market and have the potential to gain market share in the long term.

Hershey’s brands include Cadbury, Reese’s, Twizzlers, KitKat and Jolly Rancher, as well as popular snacks like Skinny Pop. These brands offer a wide sales network around the holidays. Such a large portfolio of brands helps build relationships with retailers who can help Hershey market and increase sales.

3. Excellent dividend record

Despite a difficult year, Hershey generated net income of $1.8 billion on revenue of $11 billion over the last four quarters. Net income equates to adjusted earnings per share of $8.96, of which the company currently pays a quarterly dividend of $1.37. This gives the stock a dividend yield of 2.75% – the highest in five years.

HSY dividend yield data from YCharts

Hershey’s quarterly dividend has increased 77% over the past five years, and the company has paid 378 consecutive dividends over the past few decades. The company’s long dividend payout history means it has a solid business model that has survived numerous recessions over the past century.

Keep in mind that the recent rise in cocoa prices will likely continue to weigh on Hershey’s earnings through 2025. Wall Street analysts currently expect Hershey to report adjusted earnings of $9.53 this year, which will then decline slightly to $9.46 in 2025. Based on these expectations, the stock may not recover anytime soon.

However, if you are primarily interested in the dividend, Hershey is a safe investment. Cocoa prices may remain high, but investors should expect management to make adjustments to reduce manufacturing costs so that earnings remain high and dividends can continue to be paid.