It’s Almost Halloween — and I’m Thinking About Tootsie Roll Industries (TR)

But not because I’m craving candy. There’s a really interesting “trick or treat” happening with this stock every single year, and I think you’ll find it pretty cool once you understand what’s going on.

What Makes Tootsie Roll Special?

Tootsie Roll is what’s called a Dividend King. That means they have raised their dividend for at least 50 consecutive years. Think about that for a second. Fifty years! Through oil crises, dot-com bubbles, the 2008 financial crisis, COVID… these companies kept paying shareholders more money, year after year.

Tootsie Roll has raised its dividend for 59 straight years as of 2025. That puts them in rare company.

Here’s what makes them even more interesting:

Debt-free balance sheet (which means they’re basically bankruptcy-proof, since you can’t go broke if you don’t owe anyone money)
Free cash payout ratio around 24% (that’s the percentage of profits the company gives out as dividends—so there’s plenty of cushion)
Quarterly cash dividend is about $0.36 per year (roughly a 1% yield)
Stable candy business that people buy whether the economy is booming or tanking

These guys aren’t flashy, but they’re solid as rock candy.

The Annual Stock Dividend “Trick or Treat”

Here’s a fun fact: every year for decades, Tootsie Roll does something that confuses a lot of people. They give shareholders a 3% stock dividend.

If you own 100 shares of Tootsie Roll, each year they’ll give you 3 more shares—for free! Sounds great—until you realize it’s more of a trick and a treat.

Here’s the deal: Stock splits are basically accounting tricks. They don’t actually change anything fundamental about the company.

Think of it like a pizza. You have a pizza worth $30,000. Right now it’s cut into 100 slices, so each slice is worth $300.

Then the company does a 6-for-1 stock split. They take each of your slices and cut them into 6 smaller pieces. Now you have 600 tiny slices instead of 100 big slices. Each tiny slice is now worth $50.

Question: Did the pizza get bigger?
Answer: Nope! You still have $30,000 worth of pizza. Exact same ingredients, exact same size, just cut into more pieces.

They give you that 3% stock dividend every year. So if you own 100 shares, you get 3 more shares added to your account. The stock price adjusts slightly to keep your total value the same, but now you have more shares.

And here’s where it becomes a treat: You can sell those extra shares for cash.

Remember, their regular cash dividend is only about 1% per year. Not super exciting. But if you sell the 3% worth of extra shares they give you every year, you’re now getting a combined payout of over 4%. That’s actually pretty decent for a super-safe, debt-free company!

So while the stock dividend itself doesn’t make you richer (it’s still just slicing the pizza differently), it gives you the option to generate more cash income if you want it.

Regular vs Reverse Stock Splits: What’s the Difference?

You need to know something about stock splits, because not all splits are created equal.

Regular splits usually happen when a company is doing well. The share price has climbed so high that regular investors think the stock looks expensive. So the company splits the stock to make it more “affordable.” This usually means the company has done well enough that the price got really high.
Reverse splits are different. Companies do these when they’re struggling and the share price has gotten too low. The New York Stock Exchange and NASDAQ require stocks to stay above $1.00 per share. If your stock is trading at 50 cents, you might be in danger of getting kicked off the exchange.

So a company might do a 1-for-10 reverse split. If you had 100 shares at $0.50 (worth $50 total), you now have 10 shares at $5 (still worth $50 total). The company’s problems didn’t magically disappear—they just made the price look better on paper.

It’s like taking a moldy, rotten pizza and combining all the slices into one piece. You now have one whole pizza instead of 10 slices, but it’s still a moldy, rotten pizza.

Now, not every reverse split is a total disaster. For example, General Electric (GE) did a 1-for-8 reverse split in 2021. But it wasn’t because they were trying to avoid getting delisted. They had sold off massive parts of their business and wanted their share count to reflect their new, smaller size.

The difference? GE had new leadership, a real turnaround plan, and was genuinely fixing the business. Since that reverse split, GE stock has gone from around $50 to $175—that’s a 250% gain. They’ve split into three separate companies (GE Aerospace (GE), GE Healthcare (GEHC), and GE Vernova (GEV), and it’s actually worked out.

Why? Because the reverse split was part of a strategic transformation, not just a desperate attempt to survive.

On the flip side, let me tell you about Aurora Cannabis (ACB). This was personal for me because I got burned during the cannabis boom.

I had 100 shares of Aurora Cannabis. Then they did a 1-for-12 reverse split in May 2020. My 100 shares became about 8 shares—and I sold out. The stock kept falling, so in February 2024 they did another reverse split, this time 1-for-10.

If you had 100 shares before the first split, you’d have about 8 shares after the first split, and then less than 1 share after the second split!

The stock was over $1,400 per share (split-adjusted) back in 2018. Today it trades around $5. That’s a 99.6% loss.

The lesson? When a company does multiple reverse splits in a few years, run. It’s almost always a sign the business is failing, not just the stock price.

So, Is Tootsie Roll’s Annual Stock Dividend a Trick or a Treat?

It’s a trick because, like all stock splits, it’s just an accounting maneuver. The shares you get don’t make you richer—they just represent a different way of slicing up your ownership in the company.

But it’s a treat because Tootsie Roll is genuinely solid. Debt-free, stable business, 59 years of raising dividends, and a product people buy no matter what’s happening in the economy. This is the kind of company that’s great for income investors—people who want stable, reliable cash flow from their investments.

Just don’t expect wild growth. Tootsie Roll isn’t innovating or expanding like crazy. They’re basically the same company they were 20 years ago, just chugging along and paying dividends. If you’re looking for the next Apple (AAPL) or Amazon (AMZN), this isn’t it.

But if you want a safe, boring stock that pays you every quarter and gives you some extra shares to sell each year? Tootsie Roll might be worth a look.

The Most Important Thing About Stock Splits: The Pizza Test

Whether it’s Tootsie Roll’s annual stock dividend, a regular split, or a desperate reverse split…
The number of slices doesn’t matter. What matters is whether you’re eating a fresh, delicious pizza or a moldy, rotten one.

Focus on the business fundamentals:

Is the company making money?
Is it debt-free or drowning in debt?
Are sales growing or shrinking?
Does management have a real plan, or are they just trying to survive?

Those are some of the ingredients that actually matter.

Happy Halloween, and happy investing!

Disclaimer: This is not investment advice, just one person’s opinion that may be incorrect. Do your own research before making any investment decisions.

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Check out the portfolio on Blossom, the podcast, or see what’s cooking on YouTube.

And now, here is this week's portfolio activity...

Dividends Received This Week ~$0😔

None.

Dividends Received Year to Date (Schwab Only)~

$4,756.28

Stocks Sold (AVERAGE)

None

Stocks Bought (AVERAGE)

1 iShares 0-3 Month Treasury Bond ETF (SGOV) | $100.65

10/27 Royal Bank of Canada (RY), 3.01% | 80S
10/29 Carrier Global (CARR), 1.56% | 60BS
10/30 Constellation Brands (STZ), 2.92% | 70S
10/31 Agree Realty (ADC), 4.20% | 70S
10/31 Costco (COST), 0.56% | 99VS
10/31 Enterprise Products Partners (EPD), 7.03% | 65S
10/31 Realty Income (O), 5.39% | 80S
10/31 Texas Instruments (TXN), 3.36% | 80S
10/31 A.O. Smith (AOS), 2.09% | 99VS
10/31 Zoetis (ZTS), 1.37% | 74S

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Oct 24 · The Economics of Everyda...

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After listening to this wonderfully compact episode of The Economics of Everyday Things, you won't look at gas stations the same way every again!

🎦If you missed it, this is a response to a community member's question, who I met in Las Vegas.

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