Recent Buy: Hanesbrands Inc.

I added more shares to my portfolio with the purchase of Hanesbrands Inc. (HBI)

81 shares @ $20.20 on 12/22/2017.

This increases my forward 12-month dividend income by $48.60 to a total of $4,605.90

I also updated my portfolio page to reflect the change.

My Thoughts

I last bought into Hanes a few weeks ago. When I made that buy, the stock jump almost 5%. Since that time the price of HBI has come back down lower than my initial buy price. I saw this as a great opportunity to buy more shares. The only issue I had at the time was that I did not have any capital to buy more shares.

I was looking at my portfolio page and thought that selling an overvalued company would be a great idea. The question was which one?

As I was looking over my portfolio, I wanted to find a company that had a lower dividend yield, lower dividend growth rate, and that I found to be extremely overvalued. Lucky me. I found one.

I decided to sell Wal-Mart Stores. You can read more about it in my last post.

HBI has a lower dividend payout ratio of 35% compared to WMT dividend payout ratio of 54%. The company also has a higher dividend yield of 2.96% vs WMT 2.74%(my initial investment yield). The top reason why I bought HBI was for its young and high dividend growth rate.

Hanes has a 5-year dividend growth history with a 3 year average of 43.1%. The most recent dividend increase was 36.4% which was announced in January of this year. The next dividend increase is expected to be in late January. I am predicting a low double-digit increase of 10%-15%.

HBI is undervalued, and I recommend it a BUY at this time. I have a fair price of $28.88 which means that HBI is 29.3% undervalued.

Source: fastgraphs.com

What do you think of HBI? Plan on buying? or why not?

Thanks for reading, and don’t forget to follow me:

Feedly:

Twitter:
Follow @fiscalvoyage

Facebook:

Image by Sira Anamwong at FreeDigitalPhotos.net

Connect with me: