Dividends4Life: 7.59% Yield Is Attractive For An Income Portfolio

7.59% Yield Is Attractive For An Income Portfolio

Posted by D4L | Wednesday, October 07, 2015 | | 0 comments »

On August 10th I recommend dividend investors buy Highway Holdings (NASDAQ:HIHO) due to their >10% dividend yield, high cash position (75% of the market cap was in cash), zero debt issue, and deep value opportunity (EV/EBITDA and EV/Revenue was 2.53 and 0.19, respectively). The company has exceeded my results and has hit my bull case scenario (price target of $5.06/share). This is without any fundamental changes to the business. The only news that was released since my article on HIHO was when the Street released an article titled "4 Super-Safe High Dividend Stocks to Buy Now." I am thus attributing the recent rise in the stock price to more investor attention of the company from my article and more importantly, the Street's article.

The only thing that has changed since my original thesis on HIHO is the price. The dividend is still sustainable and I have a high conviction that the company will continue to perform profitability. You can't pick this company up for the price in which you could around a month ago, but you can still lock in a decent dividend at a moderate price. If you are a deep value investor, I would suggest looking somewhere else, for HIHO does not present itself as a deep value play anymore. Dividend investors on the other hand should love this company due to the sustainability of its high dividend. All in all, I believe that HIHO is a good income stock. If the price falls back into deep value territory value guys may want to take a second look.

Source: Seeking Alpha

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