An In-depth Look into the Dividend Performance and Sustainability of Harvey Norman Holdings Ltd
Harvey Norman Holdings Ltd (HNORY, Financial) recently announced a dividend of $0.39 per share, payable on 2023-11-28, with the ex-dividend date set for 2023-10-12. 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 delve into Harvey Norman Holdings Ltd's dividend performance and assess its sustainability.
What Does Harvey Norman Holdings Ltd Do?
Harvey Norman Holdings Ltd is the franchisor of Harvey Norman, a leading Australia-based retailer that sells goods from the electrical, computer, furniture, entertainment, and bedding sectors. The majority of earnings are generated in Australia, with the international divisions gradually growing in significance.
A Glimpse at Harvey Norman Holdings Ltd's Dividend History
Harvey Norman Holdings Ltd has maintained a consistent dividend payment record since 2015. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Harvey Norman Holdings Ltd's Dividend Yield and Growth
As of today, Harvey Norman Holdings Ltd currently has a 12-month trailing dividend yield of 8.23% and a 12-month forward dividend yield of 6.65%. This suggests an expectation of decrease dividend payments over the next 12 months.
Over the past three years, Harvey Norman Holdings Ltd's annual dividend growth rate was 13.20%. Extended to a five-year horizon, this rate decreased to 7.50% per year. And over the past decade, Harvey Norman Holdings Ltd's annual dividends per share growth rate stands at an impressive 13.70%.
Based on Harvey Norman Holdings Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Harvey Norman Holdings Ltd stock as of today is approximately 11.82%.
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 2023-06-30, Harvey Norman Holdings Ltd's dividend payout ratio is 0.72. And this may suggest that the company's dividend may not be sustainable.
Harvey Norman Holdings Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Harvey Norman Holdings Ltd's profitability 9 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of 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. Harvey Norman Holdings Ltd's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Harvey Norman Holdings Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Harvey Norman Holdings Ltd's revenue has increased by approximately 5.60% per year on average, a rate that outperforms than approximately 55.21% 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, Harvey Norman Holdings Ltd's earnings increased by approximately 3.30% per year on average, a rate that outperforms than approximately 39.15% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 12.00%, which outperforms than approximately 58.46% of global competitors.
Conclusion
In conclusion, while Harvey Norman Holdings Ltd's dividend payments and growth rate are commendable, the high payout ratio raises questions about the sustainability of its dividend. However, the company's high profitability rank and growth metrics suggest a good outlook for the company. As always, investors are advised to conduct their own comprehensive analysis before making investment decisions.
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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.
