HVT - Haverty Furniture Companies: A Perfect Fit For Conservative Dividend Investors

2024-05-23 06:39:43 ET

Summary

• Revenues are falling significantly after a boost in 2021 and 2022 as the housing industry is being impacted by high interest and mortgage rates.
• Despite laudable efforts on the part of the management, inflationary pressures and lower volumes are putting significant pressure on profit margins.
• The balance sheet is very robust and the company is free of debt, which should allow it to overcome the clouds without significant difficulties.
• The regular dividend yield on cost has reached 4.5%, suggesting that the recent share price decline is a good opportunity for any long-term conservative dividend investor.

Investment thesis

After experiencing a demand boost in 2021 and 2022 driven by the reopening the U.S. economy after the worst months of the coronavirus pandemic, a significant number of Haverty Furniture's ( HVT ) customers have their home furniture renovated, which is creating a negative rebound effect for revenues that began in 2023 and continues to intensify as, to this, we must add a housing industry weakened by high interest rates, with no expected decreases in the short term. Also, inflationary pressures negatively impacted the industry's profitability due to wage inflation, increased pricing pressures and freight costs, and weaker consumer confidence....

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