Recent Buy – HBI

Today, I initiated a position in Hanesbrands, Inc. (HBI).  Many of you are probably familiar with HBI, which designs, manufactures, sources and sells apparel essentials such as t-shirts, innerwear, casualwear, activewear, socks and hosiery.  It markets its products under the brand names of Hanes, Champion, and Maidenform, among many others.

I contemplated purchasing HBI at $20 back in February/March of this year, but the price eventually ticked up before I did, and I decided to focus on other stocks.  The price continued to rise over the summer.  However, in the past couple of months HBI has dropped about 20%, to a point lower than it was earlier in year.  Recently, it’s been bumping up against its 52-week low near $19.  With the price drop, the yield for HBI has crept over 3.1%.  This is the highest it’s been since HBI began paying dividends in 2013.

Over the next 5 years, I’m estimating that HBI will grow annual sales at 4%-5% (which is a bit disappointing), but can grow annual earnings in the 7%-9% range.  Coupled with a 3% yield, this would be an annual 10%-12% total return, neglecting any P/E expansion/contraction.

Here are the purchase details…

 

HBI

On 11/14/17, I purchased 200 shares at $18.978/sh, for a total of $3,795.60.

This purchase results in an additional $120.00 in annual forward dividend income, bringing the annual total to $7,228.29, or just over an average of $600/mo.

HBI gets added to the portfolio as one of the smallest positions, fighting with SCG for the bottom spot.  It also joins VFC as another retail apparel company in the portfolio.

 

Has HBI been on your radar at all?  Do you prefer a different retail apparel company over HBI?  Are you avoiding this sector/industry altogether?  Looking forward to your thoughts…

Posted on by Engineering Dividends

10 thoughts on “Recent Buy – HBI”

  1. I like it. HBI is on my radar but it hasn’t reached a point where I wanted to pull the trigger. They’ve been doing a lot of expansion lately and I want to see how that plays out before I dive in. There’s a lot of pressure on the domestic front with retail struggles so while I agree this is a good short term play, it may have some short term struggles. I’d probably pick up some shares if it dipped under $17 although I’m not sure we’ll go that low.

    1. I agree there are some near-term questions. Like you, I noticed the recent debt they’ve taken on. I’d hope this results in some improvement in the business in the next couple of years. We’ll see. You may get a chance to buy below $17 if the market takes a turn down. Thanks for stopping in and commenting, TITM!

  3. HBI has been on my radar recently for all the reasons you cited in your article. Definitely keeping a close eye on it. Congrats on the new position and I LOVE the position you have amassed. You are going to love those dividend checks 🙂

    Bert

    1. Thanks, Bert. Yes, I’m going to love those dividends. Unfortunately, I missed the ex-dividend date for the Dec. payment by a couple of trading days, so I’ll have to wait until next March before I collect the first dividend.

  4. Always love to read about buys still coming in. Keep up the good work by finding these values. I have seen HBI in a handful of portfolios but not too many. For such a staple type of company you’d think it would be more popular as an investment. With Buffett and his Fruit of the Loom holding you already know this is a good industry to invest.

    1. Despite the long upward trend in the market, there are still values to be had out there… we just need to find them. I agree with your thoughts on HBI. I don’t think t-shirts, socks, etc. will be going out of fashion anytime soon. I think HBI has quality products that will stand the test of time. Thanks for stopping in and commenting, DivHut. Happy Thanksgiving!

  5. Hey ED,

    Love the recent purchase! I’ve actually been purchasing a few shares here and there in Robinhood. I think HBI is a fantastic company and is shielded from the “retail apocalypse” since people will always buy undershirts, socks, underwear, etc. Great dividend yield too!

    -CD

    1. Thanks CD, I like where I was able to get in on HBI. Let’s hope it moves up from here.
      I checked out your portfolio and saw you have a couple names that I have, but that I don’t typically see in other portfolios: RPM & OZRK.
      I’ve been a long-time holder of RPM (over 20 years!) and have done well with it. I’ve only held OZRK a year or two, but I’m happy with it so far. Glad to see you are a fellow shareholder of both.
      Thanks for the comment! Hope to have you stop by again.

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