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Should You Buy Hooker Furniture Corporation (NASDAQ:HOFT) For Its Dividend?

Simply Wall St

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A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Historically, Hooker Furniture Corporation (NASDAQ:HOFT) has paid a dividend to shareholders. It currently yields 2.2%. Does Hooker Furniture tick all the boxes of a great dividend stock? Below, I'll take you through my analysis.

Check out our latest analysis for Hooker Furniture

Here's how I find good dividend stocks

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

  • Is it paying an annual yield above 75% of dividend payers?
  • Has it paid dividend every year without dramatically reducing payout in the past?
  • Has dividend per share amount increased over the past?
  • Does earnings amply cover its dividend payments?
  • Will it be able to continue to payout at the current rate in the future?
NasdaqGS:HOFT Historical Dividend Yield, March 26th 2019

How well does Hooker Furniture fit our criteria?

Hooker Furniture has a trailing twelve-month payout ratio of 20%, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.

If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. HOFT has increased its DPS from $0.40 to $0.60 in the past 10 years. It has also been paying out dividend consistently during this time, as you'd expect for a company increasing its dividend levels. This is an impressive feat, which makes HOFT a true dividend rockstar.

Relative to peers, Hooker Furniture has a yield of 2.2%, which is on the low-side for Consumer Durables stocks.

Next Steps:

With this in mind, I definitely rank Hooker Furniture as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three important aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for HOFT’s future growth? Take a look at our free research report of analyst consensus for HOFT’s outlook.
  2. Valuation: What is HOFT worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether HOFT is currently mispriced by the market.
  3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.