Investors who want to cash in on Harley-Davidson’s (NYSE:HOG) upcoming dividend of $ 0.37 have only 3 days left to buy the shares before the so called ex-dividend date on the Tue 23 May 2017. The dividend will be payable on the Fri 09 Jun 2017. But is this actually an interesting opportunity for dividend investors? I’m going to look into that.
What is the ex-dividend date?
If you purchase a stock on or after its ex-dividend date, you will not receive the next dividend payment. Instead, the seller gets the dividend. If you purchase before the ex-dividend date, you get the dividend.
How does Harley-Davidson (HOG) fare as a dividend stock?
The first thing I always check after looking at a company’s dividend yield is the payout ratio.
Payout ratio is a measure of what portion of a company’s earnings are paid out to shareholders as a dividend. So a payout ratio of 50% would mean for every $ 1 earnt they pay 50c as a dividend. Likewise a payout ratio of 150% means the company is paying out more as a dividend than it earns, usually this is paid out of debt or cash.
The company currently pays out 40% of its earnings as a dividend, meaning the dividend is sufficiently covered by earnings. In 3 years time the analysts are predicting dividends per share to be around $ 1.717 and EPS to increase to $ 4.64. This means they should be able to continue the dividend payout with an expected future payout ratio of 37%.
In addition to the payout ratio, the payout consistency is a significant consideration when assessing the quality of HOG’s dividend.
If there’s one type of stock you want to be reliable, it’s dividend stocks. Although HOG’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the DPS (dividends per share) in some years although it has so far always picked up again.
HOG’s yield sits at 2.67%, which is high for a automobiles stock but still below the market’s top dividend payers.
The Take Away
Taking all the above into account, Harley-Davidson is a complicated pick for dividend investors although there is a couple of positive things about it.But if you are not exclusively a dividend investor, HOG could still be an interesting investment opportunity.
See our latest analysis (it’s FREE) to explore what investment opportunities Harley-Davidson may offer. If you are looking for great dividend payers I recommend you also take a look at our list of Dividend Rock Stars.
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