Hershey Trades 21% Below Its Historical P/E. Here Are 2 More Dividend Stocks
Blue-chip dividend payers rarely go on sale, but three household names now trade below their long-run earnings multiples while still covering their payouts with room to spare. The question is whether the market is handing income investors a gift or…
Income investors close to retirement rarely get to buy blue-chip dividend payers for less than their past valuations. We took each company’s price-to-earnings ratio at every year-end from 2011 through 2025, using adjusted earnings, and averaged it. Then we compared that average with today’s multiple on the last four quarters of adjusted earnings. Three household names trade below their long-run averages and still pass a dividend-safety check on payout coverage, cash flow, balance sheet, and track record. Hershey (NYSE:HSY | HSY Price Prediction) shows the widest gap, at about 19x trailing adjusted earnings against a 15-year average of roughly 24x.
Hershey: Iconic Candy Brands at a Below-Average Multiple
Hershey trades at $167.48. That is down 5.9% year to date and well below the 52-week high of $235.80. At about 19x trailing adjusted earnings, the stock sits below its 15-year average and also below its 10-year average of roughly 24x. The dividend yields 3.57%, paid as $1.452 per share each quarter.
The forward annual dividend of $5.808 works out to about 67% of the midpoint of management’s raised adjusted EPS guidance of $8.58 to $8.74. That payout is full but manageable for a consumer staple with a trailing operating margin of 25.6%. On the balance sheet, total liabilities of $9.02 billion sit against $4.88 billion of shareholders’ equity, with guided interest costs near $200 million. The payment record runs uninterrupted back to 1999. Recent rates climbed from $0.773 to $1.37, where the payout held through the 2024 and 2025 entries, and then rose to $1.452 this year.
Earnings are recovering fast. Third-quarter adjusted EPS of $2.64 beat the $2.11 estimate, and North America Confectionery segment margin rose 1,400 basis points to 35.8%. The board also approved an extra $500 million buyback authorization. For the stock to move back toward its historical multiple, Hershey has to show that margins hold up after tariff refunds and commodity relief stop helping the numbers.
Volume is the weak spot. Last quarter, volume fell about 10 points, which nearly canceled out 11 points of net price realization. Chocolate costs are also climbing into Halloween season. If shoppers keep cutting back, price increases can’t carry earnings growth on their own.
Verizon: An Ultra-High Yield Backed by Record Cash Flow
Verizon (NYSE:VZ) yields 6.29%, which makes it the only ultra-high-yield name in this group. The quarterly dividend is $0.7075, or $2.83 a year. At $45.01, the stock trades at about 9x trailing adjusted earnings. That is below its 10-year average of about 11x and its 15-year average of about 13x. On forward earnings, the multiple drops to roughly 8x.
Cash flow covers the dividend comfortably. Free cash flow through nine months reached $18 billion, and dividends paid came to $8.8 billion, about 49% of free cash flow. Third-quarter free cash flow of $7.8 billion was the highest since 2020. Management now expects full-year free cash flow growth to approach 12%. The dividend is also about 56% of the midpoint of adjusted EPS guidance. Net unsecured debt to adjusted EBITDA improved to 2.3x. Verizon has paid a higher quarterly rate every year in the record, rising from $0.565 in 2016 to today’s $0.7075, its highest regular payout on file.
The operating business is improving too. Postpaid phone net additions came in at 406,000, up from 44,000 a year earlier, and adjusted EBITDA margin reached 40.2%. Signed AI Connect contracts total about $4 billion. Finance chief Tony Skiadas told analysts, “We remain committed to growing the dividend and delivering enhanced returns to our shareholders through share repurchases.” To earn back its 10-year average multiple, Verizon needs subscriber momentum to continue while AI Connect revenue starts showing up in results.
Debt is still the main concern. Outstanding debt totals $166.2 billion, with interest costs up 17.2% year over year. If debt reduction stalls, there is less room for future dividend increases.
CVS Health: An Aetna Turnaround Priced Below Its Long-Run Average
CVS Health (NYSE:CVS) yields 2.95% on a quarterly dividend of $0.665. At $90, the shares trade at about 11x trailing adjusted earnings versus a 15-year average near 13x. Over the past decade alone, the average is also about 11x. In other words, CVS is cheap against its long history and fairly priced against its recent history, giving it the lowest discount of the three. The stock is below its 52-week high of $109.22.
CVS has the strongest coverage in the group. The annual dividend of $2.66 is about 33% of the midpoint of raised adjusted EPS guidance of $7.90 to $8.10. Year-to-date operating cash flow of about $10.6 billion far exceeded the $1.7 billion paid in dividends, a ratio of roughly 16%. Management expects at least $11.5 billion of operating cash flow for the full year.
Leverage sits near 3.5x, and the outlook assumes no share buybacks. Quarterly payments run continuously from 1999. Payments have stayed at $0.665 since early 2024, after rising from $0.605.
Aetna is driving the recovery. The medical benefit ratio (the share of premiums spent on patient care) improved to 87.4% from 89.9%, and Health Care Benefits adjusted operating income rose 85.5% to $2.43 billion. Finance chief Brian Newman called $8.44 a reasonable floor for next year’s adjusted EPS, while management confirmed a mid-teens adjusted EPS growth rate through 2028. If Aetna keeps delivering, falling leverage could bring capital returns back into view. Newman said, “We will continue to evaluate capital deployment opportunities as our leverage position improves.”
The pharmacy benefits business faces pressure next year. Management’s preliminary outlook flags continued 340B headwinds (340B is a federal drug-discount program) and declines in Caremark membership, which could offset part of the Aetna gains.
Three Discounted Dividends With Room to Spare
Hershey, Verizon, and CVS Health all trade below their 15-year average earnings multiples, and each covers its dividend with room left over. Verizon pays the most income today, Hershey has the widest valuation gap, and CVS has the strongest coverage. For retirees building an income portfolio, each payout looks secure, while share prices still reflect doubt that recent earnings reports have started to answer. If you want to go deeper on blue chips with multi-decade raise runs, we ranked ten of them by today’s valuation in a free Dividend Kings report.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
