Updated on July 10th, 2025 by Felix Martinez
Tootsie Roll Industries (TR) has a dividend growth track record that few companies can rival. The company has increased its cash dividend for 59 consecutive years, including its annual stock dividend.
Its dividend history puts Tootsie Roll among the elite Dividend Kings, a small group of stocks that have increased their payouts for at least 50 consecutive years.
You can see the full list of all 55 Dividend Kings here.
Additionally, we compiled a list of all Dividend Kings, including key financial metrics such as dividend yields and price-to-earnings ratios.
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Dividend Kings are the “best of the best” when it comes to rewarding shareholders with cash.
Tootsie Roll Industries has a long history of dividend growth, but the current yield is relatively low at 1.1%. Therefore, it is not a highly appealing stock for income.
This article will discuss Tootsie Roll’s dividend and valuation outlook.
Business Overview
Tootsie Roll traces its roots back to 1896 when Leo Hirschfield began selling candy made from a family recipe in his shop in Brooklyn. He then went to work for The Stern & Saalberg Company, which later became The Sweets Company of America and eventually morphed into the enterprise we know today.
The company’s history of innovation in candy products began with Hirschfield’s inventive mind, which led to various patents surrounding the manufacturing process and, indeed, the texture of the company’s signature Tootsie Roll. That spirit of innovation was key to Tootsie Roll’s beginning and subsequent growth, a factor that was significantly aided by two world wars.
Tootsie Roll experienced tremendous growth and mainstream adoption of its candies during World War I and World War II, as Tootsie Rolls were added to military rations due to their very tough texture, which could remain firm in any environment soldiers encountered.
Source: Investor Presentation
While WWI and WW2 were horrible events in human history, they helped make Tootsie Roll what it is today. To its credit, the company seized the opportunity to supply its treats to the US military, and that relationship continues to this day.
Tootsie Roll’s market capitalization is $2.9 billion, and the company produced about $723 million in annual revenue in 2024.
The vast majority of sales are made in the US, but the company also sells its products in Canada and Mexico. Tootsie Roll sells its products through a network of ~4,000 customers, including wholesalers, discount chains, dollar stores, supermarkets, the US military, and others. It also sells its products directly to consumers through its website.
Tootsie Roll’s brands have grown over the years from the original Tootsie Roll to various spin-offs of that brand and entirely new lines.
The company expanded into bubble gum with its 2004 acquisition of Concord Confections; it also produces various types of lollipops and some chocolate products. Although Tootsie Roll has expanded into multiple candy products, it still maintains a very narrow focus. While this allows it to excel in its core function, it also means that growth opportunities are limited, as evidenced by its years of essentially no growth.
Tootsie Roll certainly has its niche built out in the world of candy, but it is not without its risks. First, it is beholden to commodity prices, just like any other candy maker.
Tootsie Roll obviously buys a lot of sugar and corn syrup, and hence, swings in the prices of these commodities can significantly impact the company’s profitability. Tootsie Roll occasionally hedges the prices of these commodities, but it cannot escape the fact that it is subject to the whims of the markets in which these and other commodities trade.
Tootsie Roll also has largely fixed operating costs at its manufacturing facilities. As a result, when revenue declines, profitability suffers.
Additionally, there is the matter of Tootsie Roll’s dual-class structure and the fact that it is run essentially like a private company by the Gordon family. The family controls the vast majority of the voting rights of Tootsie Roll, so the company is under complete control, just as it would be if it were a private company.
Therefore, as long as the Gordon family is in charge, Tootsie Roll appears to be maintaining the status quo instead of pursuing growth opportunities or selling the company.
Tootsie Roll has a long list of customers, but is particularly reliant on Walmart (WMT), which accounts for approximately one-quarter of the company’s total revenue.
That is an enormous reliance upon one customer. While it means that Tootsie Roll has a great relationship with Walmart, it also means that should Walmart decide to dedicate valuable shelf space to a different product, Tootsie Roll could lose a tremendous amount of revenue.
The company’s relationship with Walmart has grown over the years, so this isn’t a serious risk; however, it is certainly something for investors to watch, given that Tootsie Roll is so reliant on this particular relationship.
Growth Prospects
Tootsie Roll Industries has struggled to produce meaningful growth over the past decade. Between 2012 and 2024, the company’s revenue grew at an average annual rate of 2.3%. Tootsie Roll does not allocate a significant amount of money to research and development, so that future growth will be driven primarily by organic sales growth.
The company has attempted to generate growth by introducing seasonal innovations and new product extensions, such as the Andes bar, which can be snapped apart into pieces. Its core products don’t change much, so barring some meaningful acquisition, this is perhaps the only avenue of volume growth, as evidenced by years of stagnating revenue.
However, inflation surged to a 40-year high last year due to the unprecedented fiscal stimulus packages offered by the government in response to the pandemic and the war in Ukraine. Tootsie Roll implemented material price hikes to offset high cost inflation. As a result, the company increased its revenue and earnings per share by 13% and 22%, respectively, in 2023.
As mentioned above, R&D isn’t really a meaningful expense for Tootsie Roll. The only real innovation comes from seasonal lines or product extensions, but those don’t drive transformational growth.
Competitive Advantages & Recession Performance
Tootsie Roll’s competitive advantages include its product line and distribution partnerships. The company has established a niche with its core Tootsie Roll line and its spin-offs, such as Tootsie Pops, as well as the fruit-flavored versions of the classic candy. Tootsie Rolls are unlike any other candy in the market—just as they were over a hundred years ago when they launched—and that is something that competitors cannot replicate.
Tootsie Roll, however, offers a very narrow assortment of candy. The most significant departure from its core was the acquisition of Concord, which occurred nearly two decades ago. Keep in mind that acquisitions are not a substantial part of the corporate strategy.
At the same time, the business model is fairly stable, which affords Tootsie Roll the good fortune of being fairly resistant to recessions, a key benefit when considering a dividend stock. The company’s earnings-per-share during and after the Great Recession are below:
- 2007 earnings-per-share of $0.70
- 2008 earnings-per-share of $0.54 (decrease of 23%)
- 2009 earnings-per-share of $0.75 (increase of 39%)
- 2010 earnings-per-share of $0.76 (increase of 1%)
Revenue fared very well during this period, never dipping more than 1% from year to year, an astonishing accomplishment given the depths of the recession we experienced.
However, margins performed erratically due to fluctuating input costs, and the company’s income tax rate also varied. That led to lumpy earnings, but overall, revenue remained essentially flat, and earnings initially fell but quickly recovered. We view inflationary input costs as a key risk to future earnings, although the company has mitigated this headwind through material price increases.
We continue to see Tootsie Roll as a recession-resistant business under most circumstances.
Valuation & Expected Returns
We expect Tootsie Roll to produce $1.26 in earnings per share this year, which translates to a P/E ratio of 26.9. This earnings multiple is lower than our assumed fair P/E ratio of 30.0, which is lower than the 10-year average of 33.4 for the stock.
If the stock trades at our assumed fair earnings multiple of 30.0 in five years, it will enjoy a 2.5% annualized valuation tailwind until 2030.
Tootsie Roll also provides a decent level of capital returns. The dividend yield is currently standing at 1.1%, and, of course, it is very safe, given the solid payout ratio of 29%, the debt-free balance sheet, the company’s resilience to recessions, and 59 consecutive years of dividend growth.
The company also issues a 3% stock dividend each year.
This is a somewhat unusual way to reward shareholders these days, as stock dividends are uncommon; however, the company has been doing it for a long time.
Essentially, the company provides each shareholder with a 3% capital return in the form of stock, which can be either held or sold to generate a cash dividend of sorts. Since the stock dividend is worth 3%, if an investor sells the stock dividend, the annual total yield could be viewed as north of 4%.
From a total return perspective, given the 3.0% expected growth in earnings per share, the 1.1% dividend yield, and a 2.5% annualized expansion of the valuation level, the stock could offer a total average annual return of 6.6% over the next five years.
Final Thoughts
Tootsie Roll isn’t a high-yield dividend payer by any means, but it does offer the quirky kicker of a 3% stock dividend each year. That’s something investors don’t typically find in most places, and it can either be used to increase one’s stake in absolute terms or sold to generate a larger cash payout.
However, the company has some fundamental issues that render its stock somewhat unattractive at its current price. Although margins and earnings have greatly improved in the current inflationary environment, their stagnation for a decade before the surge in inflation raises a red flag.
Additionally, as the candy industry is relatively mature in the U.S., it appears that the stock lacks meaningful growth catalysts. As a result, the stock is likely to offer double-digit annual returns going forward. We rate the stock a hold.
Additional Reading
The following databases of stocks contain stocks with very long dividend or corporate histories, ripe for selection for dividend growth investors.
- The Dividend Aristocrats List: S&P 500 stocks with 25+ years of dividend increases.
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Achievers List is comprised of ~350 stocks with 10+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500. - The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Best DRIP Stocks: The top 15 Dividend Aristocrats with no-fee dividend reinvestment plans.
- The High ROIC Stocks List: The top 10 stocks with high returns on invested capital.
- The High Beta Stocks List: The 100 stocks in the S&P 500 Index with the highest beta.
- The Low Beta Stocks List: The 100 stocks in the S&P 500 Index with the lowest beta.
- The Complete List of Russell 2000 Stocks
- The Complete List of NASDAQ-100 Stocks