Last update on 2024-06-27

Hooker Furnishings (HOFT) - Dividend Analysis (Final Score: 6/8)

Hooker Furnishings (HOFT) evaluated with a scoring system for dividend policy performance and stability, rated 6/8 based on multiple criteria.

Short Analysis - Dividend Score: 6

We're running Hooker Furnishings (HOFT) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Explain the criterion for Hooker Furnishings (HOFT) and why it is important to consider

Dividend yield measures the annual dividend payments as a percentage of the stock price. A higher than average dividend yield indicates that the company may provide better returns through dividends as compared to its industry peers. This can be particularly attractive to income-focused investors.

Average annual Growth Rate higher than 5% in the last 20 years?

Discussing the importance of analyzing the dividend growth rate over a prolonged period like 20 years for Hooker Furnishings (HOFT). This entails understanding the sustainability and reliability of dividend payments to investors.

Upon reviewing the dividend per share ratio data for Hooker Furnishings (HOFT) over the past 20 years, it is observed that the average dividend growth ratio stands at approximately 13.23%. Although there are fluctuations, including non-payment years and negative growth in some years, the overall average exceeds the 5% benchmark. This indicates that despite occasional inconsistency, the long-term trend is favorable for investors, supporting a solid dividend growth rate exceeding the 5% threshold, which is generally a positive sign.

Average annual Payout Ratio lower than 65% in the last 20 years?

Payout ratio is a key metrics which shows what portion of earnings a company is paying out as dividends to the shareholders. A lower payout ratio indicates that a company is retaining more of its earnings to reinvest into the business.

Analyzing the payout ratio of Hooker Furnishings (HOFT) over the past 20 years, the average payout ratio stands at approximately 30.35%. As a general rule, a payout ratio below 65% reflects that the company is retaining a considerable portion of its earnings. They have maintained a payout ratio well below 65% for the majority of the analyzed period, which is a good sign suggesting financial prudence and abundance of retained earnings for growth or debt reduction. However, there are notable anomalies in years like 2009, 2010, 2011, where the ratios spiked significantly above 100%, indicating the company paid more in dividends than it earned in those years. This trend may signal some volatility in earnings or short-term financial distress. A negative payout ratio in 2021 and 2023 could further imply that HOFT encountered net losses in those particular years despite continuing to pay dividends, necessitating closer inspection into the company’s recent financial health and sustainability of its dividend policy.

Dividends Well Covered by Earnings?

Earnings per share (EPS) should ideally cover the dividend payments to ensure that the company is generating enough profit to sustain its dividend policy. If dividends exceed EPS, this may indicate that the company will struggle to maintain dividend payments in the long term.

Looking at the ratio of dividends per share covered by earnings per share (EPS) for Hooker Furnishings (HOFT), the trend shows some concerning fluctuations. From 2003 to 2008, the EPS consistently covers the dividends, with ratios ranging from 0.1577 to 0.3382. However, starting from 2009, there are wider variances. For instance, in 2009 and 2010, the dividend coverage ratios jump to 0.6402 and 1.4306, respectively, indicating an overextension where dividends nearly outpace earnings in both years. The worse-off years are notably 2020 and 2022, where the ratios plummet to -0.8391 and -2.3931, respectively, showing that dividends greatly exceeded EPS, thus raising sustainability concerns. This inconsistent ability to cover dividends indicates an underlying risk in maintaining the dividend policy without compromising financial stability.

Dividends Well Covered by Cash Flow?

The criterion measures how well the company’s dividends are covered by its cash flow, gauging long-term sustainability. It indicates if Hooker Furnishings (HOFT) generates sufficient free cash flow to sustain its dividend payouts.

Hooker Furnishings (HOFT) has experienced highly volatile free cash flow (FCF) over the past two decades, with notable periods of both negative and positive values. For instance, in 2003, the FCF was -$387,000, while in 2004, it surged to $38.1 million. A volatile FCF makes it challenging to sustainably cover dividend payouts, as evidenced by the ratios calculated, with certain years exhibiting negative coverage, such as -4.8 in 2003 and -0.37 in 2023. In contrast, years like 2021 show a relatively healthier ratio of 0.70. Therefore, while moments of sufficient coverage exist, such significant fluctuations pose a risk to the reliability of future dividends. The overall trend suggests instability, which is a concerning indicator for investors prioritizing consistent dividend income.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Hooker Furnishings (HOFT) and why it is important to consider

Stable dividends over the past 20 years indicate a reliable income source, which is crucial for income-seeking investors. Consistency in payout reflects the company's robust financial health and commitment to returning value to shareholders.

Dividends Paid for Over 25 Years?

Analyzing whether Hooker Furnishings (HOFT) has paid dividends for over 25 years is crucial as it demonstrates the company's long-term financial stability and shareholder-friendly policies. Consistent dividend payments over decades can also attract income-focused investors and indicate a track record of profitability.

Hooker Furnishings (HOFT) has a track record of paying dividends since 2002. Starting at $0.1 per share in 2002, the company has shown a commitment to dividend growth, reaching $0.89 per share in 2023. Despite the fact that HOFT has not been paying dividends for 25 years yet, the 21-year history of consistent payouts is a positive indicator. The trend is good as it demonstrates a consistent and growing dividend policy, aligning well with investor expectations for income and suggesting strong company performance.

Reliable Stock Repurchases Over the Past 20 Years?

Criterion evaluates if a company consistently buys back its own shares, a practice that can be a sign of confidence in the company's future and a mechanism to return value to shareholders. Consistency over a long period, such as 20 years, indicates strong, stable financial health.

Hooker Furnishings (HOFT) has repurchased shares in 5 of the past 20 years, representing 25% of the observed timeframe. The number of shares hovered around an upward or stable trend for most years, resulting in an average repurchase rate of 0.1893. While repurchasing shares can signal management’s confidence and potentially lead to a higher stock price, the overall limited frequency might suggest conservative management or varied financial strategies reflecting market conditions. The significant repurchased in 2023 could indicate recent positive financial performance or strategic reinvestment, which is a positive sign.