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…
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…