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Dividend Portfolio: Income Stock (ASX: HVN)


Published 13-JAN-2016 00:00 A.M.


2 minute read

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Overview: Harvey Norman Holdings Limited (HVN) is the franchisor and operator for Harvey Norman, Domayne, and Joyce Mayne retail stores in Australia, New Zealand, Slovenia, Ireland, Singapore, and Malaysia. The company has 194 franchised stores in Australia and 86 company-operated stores internationally. The stores offer a diverse range of home, electronic or outdoor appliances. The company also has investments in property, media placements activities and is a provider of consumer finance.

Catalysts: Harvey Norman has recorded average profit growth of 20% over the last four years. While its domestic operations remain robust, overseas revenue experiences strong growth. The annual dividend is forecasted to yield ~5% with 100% franking. The company recently purchased a 40% interest in dairy farm operator Coomboona Holdings Limited which further diversifies Harvey Norman’s investment portfolio.

Hurdles: Harvey Norman’s sales revenue is exposed to retail conditions both domestically and overseas and may be subject to falling consumer confidence. The company's commercial property portfolio is exposed to the non-residential property market and any downturn in the sector may adversely impact valuations. Investment View: Harvey Norman provides profitable exposure to the retail sector. We are attracted to the company’s growth trajectory, diversified industry exposure, and attractive dividend yield. The commercial property portfolio is strategically positioned to provide steady income, albeit subject to property prices. Improving consumer sentiment and steady household spending are potential near-term drivers. Offering an attractive mix of capital growth and income we initiate coverage with a ‘buy’ recommendation.


General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

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