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Haverty Furniture Increases Quarterly Dividend by 12%; Good income Pay shares to buy?

Haverty Furniture Companies, Inc. (NYSE: HVT) is an American furniture and accessories retailer. The company was founded in Atlanta in 1885 and today has more than 100 locations in 16 states.

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On Tuesday, Haverty Furniture increased its quarterly dividend by 12% to 28 cents per share, from 25 cents previously. the the new annualized dividend yield will be 3.90% on the stock market. The dividend yield has increased significantly over the past year as the stock has fallen 37%. This year alone, HVT’s stock price is down -6.4%, but we think it’s starting to cheap on a PE ratio of 5.8x.

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We first noticed this stock in the US dividend rankings, where Haverty Furniture holds the 4th highest dividend score with 97.29. HVT has a two-year Fintel dividend growth rate of 2.75%. The Dividend Yield and Quality Leaderboard for the United States uses an advanced quantitative model to determine which companies offer the best revenue-generating opportunities in our database of global stocks. We use a combination of current dividend yield and dividend growth to generate a score that ranks companies from 0 to 100, with 100 being the most desirable.

HVT has also paid a few special dividends over the past few years, including a $2.00 dividend in November 2020 and another $2.00 in November 2021. Could we see more special dividends in the future?

Ha recently reported first-quarter results on the 2nd of May with an EPS growth of 6.7% over the year to $1.11 per share. The group’s revenues increased by $2.4 million during the year to $238.9 million, as same-store sales increased by 0.2%.

Chairman and CEO Clarence Smith commented on the result which highlighted a return to increased demand around special holiday shopping events, but saw a drop in in-store traffic in March. Smith noted on the result, “We believe discretionary consumer spending has been impacted by rising inflation, including fuel costs, market volatility and geopolitical concerns.” For the future, Smith remains confident in the ability to meet short-term challenges and progress toward long-term business goals.

Haverty has benefited from increased spending during the pandemic in line with lower interest rates and higher government stimulus.

Upon further research on the Fintel platform, we noticed that HVT has a short compression score of 84.28, which places it in the top 8% of the 5,500 companies included. The Short Squeeze Score is the result of a sophisticated multi-factor quantitative model that identifies the companies most at risk of experiencing a short squeeze. The rating model uses a combination of short-term interest, float, short-term borrowing cost rates and other measures. The number ranges from 0 to 100, with higher numbers indicating a higher risk of short compression compared to peers and 50 being the average.

Analyst Commentary

We note Sidoti & Co’s hedge which currently has a “buy” rating on the stock with a bullish target price of $25.75. Analyst Anthony Lebiedzinski expects the company’s free cash flow to remain in great shape, but cut 2022/23 estimates slightly on the back of inflationary commentary. Lebiedzinski expects a significant increase in free cash flow in 2023 which could be used to increase regular dividends, pay more special dividends or for more share buybacks.

We looked at the put/call ratio for HVT to determine market sentiment from options data at these levels. The title has a score of 0.62, indicating there is underlying bullish sentiment for stocks in the options market. The Put/Call ratio is the total number of disclosed open put option positions divided by the number of open call options. Since puts are generally a bearish bet and calls are a bullish bet, put/call ratios greater than 1 indicate bearish sentiment, and ratios less than one indicate bullish sentiment. We have a graph of this ratio and how it has behaved over the last three months:

Learn more about dividend classification

The main ranking factors are dividend yield and dividend growth. Since dividends are paid out of cash inflows, we provide the cash from operations payout ratio (CFOP), simply the portion of cash from operations used to pay dividends (dividends paid / cash from operations ). Companies with a negative CFOP payout ratio or a CFOP payout ratio greater than one have not derived enough cash from their operations over the past twelve months to pay the declared dividend, which could indicate that the ability of the company to pay future dividends is at risk, so we filter these companies from this list.

Article by Ben Ward, Fintel

Updated