Our analysis is based on comparing Harley-Davidson, Inc. with the following peers – Polaris Industries Inc., Bayerische Motoren Werke Aktiengesellschaft Sponsored ADR and Honda Motor Co., Ltd. Sponsored ADR (PII-US, BMWYY-US and HMC-US).
Harley-Davidson, Inc.’s dividend yield is 2.34 percent and its dividend payout is 36.55 percent. This compares to a peer average dividend yield of 2.52 percent and a payout level of 34.40 percent. This combination of a relatively lower dividend yield and a higher payout ratio suggest that the dividend payout might not be sustainable. The contra-indicator here is the relatively strong dividend quality score of 83 out of a possible score of 100, which points to some ability to sustain the higher payout ratio.
Dividend Quality Overview
- Over the last twelve months (prior to December 31, 2016), HOG-US paid a high quality dividend, which represents a yield of 2.31% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 3 were high quality, 1 was medium quality and 1 was low quality.
- The ending cash balance, with a dividend coverage of 3.24x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to December 31, 2016), HOG-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 4.65x), investing cash flow (coverage of -1.56x), issuance cash flow (coverage of -1.91x) and twelve-month prior cash (coverage of 3.39x), for a total dividend coverage of 4.24x.
HOG-US‘s issuance cash flow includes outflows from net debt repayment (coverage of -0.31x) and net share buybacks (coverage of -1.78x). Thus, the total coverage including share buybacks is 6.02x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||1.28||1.23||1.71||2.97||2.46||2.34|
|Dividend Payout (%)||22.79||25.61||28.35||33.6||36.55||36.55|
A complete list of metrics and analysis is available on the company page.
Harley-Davidson, Inc. manufactures and sells heavyweight motorcycles as well as a line of motorcycle parts, accessories, general merchandise and related services. It also provides wholesale and retail financing and insurance programs primarily to Harley-Davidson dealers and customers. The company operates through the following segments: Motorcycles & Related Products and Financial Services. The Motorcycles & Related Products segment designs, manufactures and sells Harley-Davidson motorcycles as well as a line of motorcycle parts, accessories, general merchandise and related services. The Financial Services segment consists of Harley-Davidson Financial Services, which provides wholesale and retail financing and also offers insurance and insurance-related programs primarily to Harley-Davidson dealers and their retail customers. Harley-Davidson was founded by William Sylvester Harley, Arthur Davidson, Walter C. Davidson, Sr. and William A. Davidson in 1903 and is headquartered in Milwaukee, WI.
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