HNI Corp's Dividend Analysis
Understanding HNI Corp's Upcoming Dividend Payout
HNI Corp (NYSE:HNI) recently announced a dividend of $0.32 per share, payable on 2023-12-01, with the ex-dividend date set for 2023-11-17. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into HNI Corp's dividend performance and assess its sustainability.
What Does HNI Corp Do?
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HNI Corp is a provider of office furniture and hearth products. The company generates the bulk of its revenue from its workplace furnishing, which consists of panel-based and freestanding furniture systems, seating, storage, tables, and architectural products. These products are sold primarily through a national system of dealers, wholesalers, and office product distributors but also directly to end-user customers and federal, state, and local governments. Residential building products include a full array of gas, wood, electric, and pellet-fueled fireplaces, inserts, stoves, facings, and accessories. The company has operations in the United States, Canada, Mainland China, Hong Kong, India, Mexico, and Taiwan.
A Glimpse at HNI Corp's Dividend History
HNI Corp has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. HNI Corp has increased its dividend each year since 1985. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 38 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down HNI Corp's Dividend Yield and Growth
As of today, HNI Corp currently has a 12-month trailing dividend yield of 3.23% and a 12-month forward dividend yield of 3.23%. This suggests an expectation of same dividend payments over the next 12 months. Over the past three years, HNI Corp's annual dividend growth rate was 1.60%. Extended to a five-year horizon, this rate increased to 2.20% per year. And over the past decade, HNI Corp's annual dividends per share growth rate stands at 3.20%.
Based on HNI Corp's dividend yield and five-year growth rate, the 5-year yield on cost of HNI Corp stock as of today is approximately 3.60%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, HNI Corp's dividend payout ratio is 1.28, and this may suggest that the company's dividend may not be sustainable.
HNI Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks HNI Corp's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. HNI Corp's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and HNI Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. HNI Corp's revenue has increased by approximately 2.70% per year on average, a rate that underperforms than approximately 64.57% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, HNI Corp's earnings increased by approximately -7.20% per year on average, a rate that underperforms than approximately 73.6% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -7.70%, which underperforms than approximately 82.02% of global competitors.
Next Steps
Considering HNI Corp's longstanding history as a dividend-paying company and its status as a dividend aristocrat, the stock may appeal to investors seeking consistent income. However, the sustainability of HNI Corp's dividend payments, given its current payout ratio and mixed growth metrics, is a critical factor investors must evaluate. While the company's profitability rank is strong, its growth indicators present a complex picture, suggesting the need for a closer look at the company's strategic initiatives and market position. Investors may find it prudent to balance the attractive aspects of HNI Corp's dividend history with the insights provided by its recent growth and profitability data.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
