U.S. Markets closed

Does Hooker Furniture Corporation (NASDAQ:HOFT) Have A Place In Your Portfolio?

Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Historically, Hooker Furniture Corporation (NASDAQ:HOFT) has paid a dividend to shareholders. It currently yields 1.8%. Should it have a place in your portfolio? Let’s take a look at Hooker Furniture in more detail.

Check out our latest analysis for Hooker Furniture

5 checks you should do on a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

  • Does it pay an annual yield higher than 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?
  • Is is able to pay the current rate of dividends from its earnings?
  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
NasdaqGS:HOFT Historical Dividend Yield October 10th 18

How well does Hooker Furniture fit our criteria?

The current trailing twelve-month payout ratio for the stock is 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. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. HOFT has increased its DPS from $0.40 to $0.56 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes HOFT a true dividend rockstar.

Compared to its peers, Hooker Furniture has a yield of 1.8%, which is on the low-side for Consumer Durables stocks.

Next Steps:

Taking into account the dividend metrics, Hooker Furniture ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. I’ve put together three important factors you should look at:

  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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.