Our analysis is based on comparing HNI Corp. with the following peers – Knoll, Inc., Steelcase Inc. Class A, Herman Miller, Inc., Kimball International, Inc. Class B, Virco Mfg. Corporation, Snap-on Incorporated, Kewaunee Scientific Corporation and Dorel Industries Inc. Class A (KNL-US, SCS-US, MLHR-US, KBAL-US, VIRC-US, SNA-US, KEQU-US and DII.A-CA).
HNI Corp.’s dividend yield is 4.17 percent and its dividend payout is 74.67 percent. This compares to a peer median dividend yield of 2.47 percent and a payout level of 40.24 percent. This type of dividend performance might make it a good stock for dividend investors. However, the company’s relatively low dividend quality score of 33 out of a possible score of 100 raises questions on the sustainability of its robust payout ratio.
Dividend Quality Overview
- Over the last twelve months (prior to September 30, 2017), HNI-US paid a medium quality dividend, which represents a yield of 3.32% 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 is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
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Over the last twelve months (prior to September 30, 2017), HNI-US paid a medium 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 3.38x), investing cash flow (coverage of -2.69x), issuance cash flow (coverage of 0.22x) and twelve-month prior cash (coverage of 0.70x), for a total dividend coverage of 1.49x.
HNI-US’s issuance cash flow includes outflows from net share buybacks (coverage of -1.33x). Thus, the total coverage including share buybacks is 2.81x, 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 net cash inflow from issuance was required (in addition to operating and investment cash) to pay the dividend, which suggests a medium dividend quality.
|Dividend Yield (%)||3.3||2.46||1.99||2.91||1.97||4.17|
|Dividend Payout (%)||88.79||69.06||73.33||45.04||57.98||74.67|
A complete list of metrics and analysis is available on the company page.
HNI Corp. engages in the manufacturing and trading of office furniture. It operates through two segments: Office Furniture and Hearth Products. The Office Furniture segment manufactures and markets storage products, desks, credenzas, chairs, tables, bookcases, freestanding office partitions, and panel systems. The Hearth Products segment develops and markets gas, electric, wood, and biomass burning fireplaces, inserts, stoves, facing, and accessories. The company was founded by C. Maxwell Stanley, Clem Hanson and H. Wood Miller in 1944 and is headquartered in Muscatine, IA.
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