Don't be dismayed about Hershey (NYSE: HSY) losing out on Cadbury (NYSE: CBY) to rival Kraft (NYSE: KFT).

Kraft is taking on a massive amount of debt to get this $19.5 billion deal done and ratings agencies are keenly watching for potential downgrades to the company's increased leverage.

The spectre of an increased debt load for Kraft has the potential to derail dividend increases and share buybacks for the foreseeable future, but that is not the kind of chatter we're hearing from Hershey.

The maker of Almond Joy, Kit Kat, Hershey's Kisses and its namesake chocolate bars will raise its quarterly dividend by 2.25 cents a share to 32 cents.

The new dividend is payable on March 15th to shareholders of record on February 25th.

Hershey's dividend increase is the company's first since the third quarter of 2007.

Based on Wednesday's closing price, the new dividend gives Hershey a decent yield of 3.44%.

Hershey, the second-largest U.S. confectioner, generates most of its sales in the U.S. and given the changing environment in the candy industry, it should be viewed as a positive sign that the company said it is still looking at acquisitions to better compete with its larger rivals.

Hershey is a fairly predictable free cash flow producer, which made the dividend increase possible, so it might be reasonable to expect the company to use its strong balance sheet to its advantage when it comes to future acquisition activity.