Haverty Furniture Companies' (NYSE:HVT) Dividend Will Be Increased To $0.33

Haverty Furniture Companies, Inc. (NYSE:HVT) has announced that it will be increasing its periodic dividend on the 11th of December to $0.33, which will be 3.1% higher than last year's comparable payment amount of $0.32. This will take the annual payment to 5.6% of the stock price, which is above what most companies in the industry pay.

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Haverty Furniture Companies' Payment Could Potentially Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Haverty Furniture Companies' profits didn't cover the dividend, but the company was generating enough cash instead. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

EPS is set to grow by 47.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 82%, which is on the higher side, but certainly still feasible.

View our latest analysis for Haverty Furniture Companies

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was $0.32 in 2015, and the most recent fiscal year payment was $1.28. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Has Limited Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Haverty Furniture Companies' EPS has fallen by approximately 11% per year during the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Haverty Furniture Companies' Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for Haverty Furniture Companies that investors need to be conscious of moving forward. Is Haverty Furniture Companies not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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