U.S. Markets closed
  • S&P Futures

    4,471.50
    -2.75 (-0.06%)
     
  • Dow Futures

    34,729.00
    -20.00 (-0.06%)
     
  • Nasdaq Futures

    15,502.75
    -15.00 (-0.10%)
     
  • Russell 2000 Futures

    2,227.60
    -5.60 (-0.25%)
     
  • Crude Oil

    72.66
    +0.05 (+0.07%)
     
  • Gold

    1,755.80
    -0.90 (-0.05%)
     
  • Silver

    22.89
    +0.14 (+0.61%)
     
  • EUR/USD

    1.1766
    -0.0006 (-0.0471%)
     
  • 10-Yr Bond

    1.3310
    +0.0270 (+2.07%)
     
  • Vix

    18.69
    +0.51 (+2.81%)
     
  • GBP/USD

    1.3789
    -0.0007 (-0.0524%)
     
  • USD/JPY

    109.8910
    +0.1730 (+0.1577%)
     
  • BTC-USD

    47,933.96
    -145.73 (-0.30%)
     
  • CMC Crypto 200

    1,227.91
    -5.38 (-0.44%)
     
  • FTSE 100

    7,027.48
    +10.99 (+0.16%)
     
  • Nikkei 225

    30,487.95
    +164.61 (+0.54%)
     

Why You Might Be Interested In Hooker Furniture Corporation (NASDAQ:HOFT) For Its Upcoming Dividend

  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Hooker Furniture Corporation (NASDAQ:HOFT) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 16th of March will not receive the dividend, which will be paid on the 31st of March.

Hooker Furniture's upcoming dividend is US$0.16 a share, following on from the last 12 months, when the company distributed a total of US$0.60 per share to shareholders. Last year's total dividend payments show that Hooker Furniture has a trailing yield of 4.2% on the current share price of $15.21. If you buy this business for its dividend, you should have an idea of whether Hooker Furniture's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Hooker Furniture

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Hooker Furniture paid out a comfortable 29% of its profit last year. A useful secondary check can be to evaluate whether Hooker Furniture generated enough free cash flow to afford its dividend. It paid out 90% of its free cash flow in the form of dividends last year, which is outside the comfort zone for most businesses. Companies usually need cash more than they need earnings - expenses don't pay themselves - so it's not great to see it paying out so much of its cash flow.

While Hooker Furniture's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Were this to happen repeatedly, this would be a risk to Hooker Furniture's ability to maintain its dividend.

Click here to see how much of its profit Hooker Furniture paid out over the last 12 months.

NasdaqGS:HOFT Historical Dividend Yield, March 11th 2020
NasdaqGS:HOFT Historical Dividend Yield, March 11th 2020

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Hooker Furniture has grown its earnings rapidly, up 23% a year for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Hooker Furniture has delivered an average of 4.8% per year annual increase in its dividend, based on the past ten years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because Hooker Furniture is keeping back more of its profits to grow the business.

The Bottom Line

From a dividend perspective, should investors buy or avoid Hooker Furniture? We like that Hooker Furniture has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

In light of that, while Hooker Furniture has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 1 warning sign for Hooker Furniture that we recommend you consider before investing in the business.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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.

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. Thank you for reading.