Over the past 10 quarters, The Hershey Company (HSY) has beaten earnings estimates 6 times and matched 4 times. The world-renowned chocolate maker has surpassed expectations in each of the first 3 quarters of 2012, and will report again on January 28. In addition, this Zacks #2 Rank (Buy) pays a regular quarterly dividend that yields 2.3%, which should grab the attention of income seeking investors.

Solid Third Quarter Results

Hershey's third quarter earnings per share of 87 cents beat the Zacks Consensus Estimate by 1.2% and eclipsed last year's performance by 3.6%.

Net sales rose 7.5% from last year to $1.75 billion, driven by both price and volume growth. Organic volume growth was driven largely by new product launches, mainly in the U.S.

Hershey's adjusted gross margin for the quarter expanded 70 basis points (bps) to 43.2%, as pricing and productivity benefits and improved efficiencies from supply chain initiatives offset headwinds from rising input costs.

Hershey's will report its fourth quarter results later this month. The Zacks Consensus Estimate at the moment is 75 cents per share, compared to 70 cents in the fourth quarter 2011.

Another Raised Guidance

Following the solid performance in the third quarter, Hershey raised its 2012 earnings guidance to between $3.22 and $3.25 per share, compared with the prior forecast of $3.17 to $3.23. Accordingly, adjusted earnings per share are expected to grow 14% to 15% year over year, versus the prior expectation of 12% to 14%.

The revenue growth guidance is now 8%-9%, instead of the previous outlook of 7%-9%. Organic volume is expected to accelerate in the fourth quarter due to the Halloween and Holiday season. Gross margin guidance for 2012 also expanded due to lower cost inflation than anticipated.

The 2013 outlook is also encouraging, especially since there is no cost inflation expected for the year. The company also raised its long term targets in June last year following its continued earnings upside.

Increasing Dividend Payout

In addition to impressive earnings growth, Hershey pays a regular quarterly dividend of 42 cents per share, representing an annual dividend yield of 2.3%. The company has been hiking the payout every year since 2010, including a 10.5% increase in October 2012 and a 10% increase in early 2012.

Rising Earnings Estimates

The Zacks Consensus Estimate for 2012 has increased 0.3% over the last 90 days to $3.24 per share, implying year-over-year growth of 14.9%. For 2013, the Zacks Consensus Estimate rose 0.6% in the same time frame to $3.59 per share, reflecting a year-over-year advance of 10.8%.