Updated 3/10/25
Hamilton Beach Brands Holding Company (NYSE: HBB) is a familiar name in the world of small kitchen appliances. From blenders and coffee makers to slow cookers and air fryers, the company has built a reputation for reliability in both consumer and commercial markets.
While the business itself is steady, investors are often drawn to HBB for its dividend potential. It offers a reasonable yield, maintains a conservative payout ratio, and has a history of profitability. But does it stack up as a solid dividend investment? Let’s dive in and take a closer look.
Key Dividend Metrics
📌 Dividend Yield: 2.26%
📌 Annual Dividend: $0.46 per share
📌 Payout Ratio: 20.68%
📌 5-Year Average Dividend Yield: 2.77%
📌 Dividend Growth: Limited, but consistent
📌 Next Ex-Dividend Date: March 3, 2025
📌 Next Payment Date: March 14, 2025
For income-focused investors, HBB offers a decent yield with a sustainable payout. While it may not be the highest-yielding stock out there, its financial discipline suggests the dividend is safe for the foreseeable future.
Dividend Overview
At just over 2%, HBB’s yield isn’t going to turn heads, but it does offer a steady stream of income with relatively low risk. More importantly, the company pays out only about 20% of its earnings as dividends. This means it keeps plenty of cash in the business to fund operations and potential growth.
One thing to note is that HBB’s current yield is slightly lower than its five-year average of 2.77%. This could mean the stock is trading at a higher valuation relative to historical levels or that dividend growth hasn’t kept pace.
For investors who prioritize safety over sheer yield, this kind of conservative approach can be appealing. The company isn’t stretching itself to pay dividends, which lowers the risk of future cuts if economic conditions change.
Dividend Growth and Safety
One of the biggest positives for HBB’s dividend is its safety. With a low payout ratio and strong free cash flow of $65.53 million, the company has plenty of room to continue distributions without stress.
That said, dividend growth has been underwhelming. While HBB has been consistent in making payments, it hasn’t made aggressive moves to increase them. This might be a drawback for long-term dividend growth investors who prefer stocks with a history of regular hikes.
On the financial health side, HBB carries some debt, but it’s manageable. The debt-to-equity ratio sits at 56.78%, which isn’t excessive. The company’s cash flow generation is solid, and its balance sheet shows enough liquidity to cover short-term obligations.
For those looking for a safe and steady dividend, HBB checks the box. But if growth is the priority, it may not be the most exciting pick.
Chart Analysis
Price Action and Trend
Hamilton Beach Brands (HBB) has gone through a volatile year, with a major run-up followed by a steep decline and a slow recovery. The price recently closed at $20.31, pushing against an area of prior resistance. Looking at the broader trend, the stock is attempting a recovery after bottoming near $14.50 earlier this year.
The 50-day moving average (light blue line) has started to curl upwards, signaling short-term momentum shifting bullish. However, the 200-day moving average (dark blue line) is still sloping downward, which suggests that the longer-term trend remains weak. The stock will need to hold above the 50-day and challenge the 200-day moving average to confirm a potential trend reversal.
Volume and Market Participation
Trading volume on the most recent move higher hasn’t been particularly aggressive, with 47,838 shares traded. While this isn’t necessarily a red flag, it would be more convincing to see a breakout accompanied by a surge in volume. Earlier in the chart, there were significant volume spikes, particularly during the peak and the subsequent sell-off, but recent trading has been relatively muted.
RSI and Momentum
The Relative Strength Index (RSI) is hovering near the upper part of its range, suggesting that momentum is building. While it’s not yet in overbought territory, it is approaching a level where traders may start taking profits. If RSI pushes beyond 70, that could indicate the stock is getting overheated in the short term. On the flip side, if it rolls over from here, it could signal the rally is running out of steam.
Key Levels to Watch
- Support: Around $18.50, where the stock recently consolidated before moving higher. If the price pulls back, this area will be important to hold.
- Resistance: Near $20.50 to $21.00, which aligns with recent highs. A clean breakout above this level could open the door for a bigger move up.
- Major Resistance: The 200-day moving average, which is sitting just above the current price. This is a critical test for whether the stock can transition into a more sustained uptrend.
Moving Averages and Crossovers
A potential golden cross—where the 50-day moving average crosses above the 200-day moving average—could be forming if the stock continues to rise. This is a bullish signal that often indicates a long-term trend change. However, if price struggles here and reverses, it could reaffirm the broader downtrend.
Overall Market Context
HBB’s movement should also be considered in the context of broader market conditions. With economic uncertainty still in play, consumer discretionary stocks like HBB can be sensitive to changes in spending behavior. If consumer confidence remains strong, this could support further upside in the stock. However, if the broader market weakens, HBB could face resistance in breaking out of this range.
Analyst Ratings
Hamilton Beach Brands Holding Company (HBB) has recently been the subject of varied analyst opinions, reflecting both optimism and caution regarding its future performance.
Upgrades
Some analysts have expressed a positive outlook on HBB, citing several factors that contribute to their optimism:
📈 Strong Financial Performance – The company’s recent earnings reports have shown solid financial health, with notable increases in revenue and profitability. This strength has led some analysts to upgrade their ratings, anticipating continued growth.
🔧 Product Innovation – HBB’s commitment to innovation, particularly in expanding its product lines, has been well-received. Analysts view this diversification as a strategic move to capture a broader market share, supporting a more favorable rating.
Downgrades
Conversely, other analysts have adopted a more cautious stance, leading to downgrades based on the following considerations:
📉 Market Volatility – Concerns about broader economic conditions and their potential impact on consumer spending have prompted some analysts to downgrade HBB. Economic headwinds could affect the company’s sales and profitability.
⚖️ Competitive Landscape – The small appliance industry is highly competitive, with numerous players vying for market share. Analysts worried about HBB’s ability to maintain its position amidst intense competition have adjusted their ratings downward.
Consensus Price Target
💰 The consensus among analysts places HBB’s price target at $13.00. This target reflects a balanced view, considering both the company’s internal strengths and external challenges. Investors should weigh these factors carefully when evaluating HBB’s stock performance.
Earnings Report Summary
Hamilton Beach Brands Holding Company (HBB) wrapped up 2024 with a solid financial performance, showing steady growth in both revenue and profitability.
Revenue and Profits Moving in the Right Direction
The company pulled in $654.69 million in revenue for the year, up from $625.63 million the year before. That’s a respectable jump, driven by consistent demand for its small kitchen appliances. More importantly, net income climbed to $30.76 million, compared to $25.24 million in the prior year. That’s a clear sign that HBB is managing its costs well and improving its bottom line. Earnings per share also got a boost, coming in at $2.20, up from $1.80.
Margins and Cash Flow Tell a Good Story
The company’s gross profit hit $170.91 million, with an operating margin of 8.25 percent. That shows they’re keeping costs under control while still maintaining healthy profits. The profit margin landed at 4.70 percent, meaning HBB is holding onto a decent portion of every dollar it brings in.
Cash flow was another bright spot. The company generated $65.42 million in operating cash flow, showing it has strong cash-generating power. After accounting for expenses, it still had $65.53 million in free cash flow, giving it flexibility to invest in growth or return money to shareholders.
Debt Levels Are Manageable
HBB ended the year with $94.2 million in total debt, but with a debt-to-equity ratio of 56.78 percent, it’s at a reasonable level for a company of this size. The current ratio of 1.97 means it has almost twice as many short-term assets as short-term liabilities, which is a good cushion to have.
Stock Performance and Dividends Keep Investors Interested
The stock has been on a bit of a ride, ranging between $14.34 and $31.78 over the last year. But with a beta of 0.70, it’s not as volatile as some other stocks out there. Dividend investors should appreciate the $0.46 annual dividend, which translates to a 2.26 percent yield. Since the company only pays out about 20.68 percent of its earnings as dividends, there’s plenty of room for potential increases in the future.
Looking Ahead
HBB spent 2024 focused on new product innovation and cost efficiency, and it seems to be paying off. The company is holding a steady position in a competitive market while continuing to find ways to grow. Overall, it was a strong year, with solid fundamentals that should keep investors interested.
Financial Health and Stability
HBB’s financials paint a picture of a well-run company with solid profitability.
- Profit Margin: 4.70%
- Operating Margin: 8.25%
- Return on Equity (ROE): 19.64%
- Return on Assets (ROA): 5.89%
- Total Cash: $51.79 million
- Total Debt: $94.2 million
With an ROE of nearly 20%, management is effectively using capital to generate profits. The operating margin of 8.25% also indicates efficient cost management, which is crucial in an industry with relatively thin margins.
Liquidity is another strength. The company’s current ratio of 1.97 means it has nearly twice as many current assets as liabilities. That provides a cushion in case of short-term financial pressures.
The only real concern here is debt. While not overly high, it’s something to keep an eye on, especially in a rising interest rate environment.
Valuation and Stock Performance
At a price-to-earnings (P/E) ratio of 9.23, HBB looks cheap compared to the broader market. Other valuation metrics also suggest that the stock isn’t expensive:
- Price-to-Sales: 0.43
- Price-to-Book: 1.65
- Enterprise Value/EBITDA: 8.33
Stock performance over the past year has been mixed.
- 52-Week High: $31.78
- 52-Week Low: $14.34
- Current Price: $19.68
- 50-Day Moving Average: $17.34
- 200-Day Moving Average: $21.59
- Beta: 0.70
HBB has been somewhat volatile, but its beta of 0.70 suggests it moves less than the overall market. That could be appealing for investors looking for stability.
Risks and Considerations
Every investment comes with risks, and HBB is no exception.
⚠️ Limited Dividend Growth – While the dividend is steady, there’s little history of aggressive increases. Investors looking for compounding returns through dividend hikes might be disappointed.
⚠️ Consumer Discretionary Exposure – As a seller of household appliances, HBB’s revenue depends on consumer spending. During economic downturns, demand for non-essential goods can decline, impacting earnings.
⚠️ Debt – Although manageable, the company’s $94.2 million in debt could become a bigger issue if borrowing costs rise.
⚠️ Competitive Market – HBB competes with established brands like Cuisinart and KitchenAid. It needs to keep innovating to maintain market share and pricing power.
⚠️ Stock Volatility – While not highly volatile, the stock has seen wide price swings. Investors should consider this when evaluating total return potential.
Final Thoughts
Hamilton Beach Brands Holding Company offers a steady, well-covered dividend with minimal payout risk. It’s not the most exciting stock in terms of dividend growth, but for those who prioritize reliability, it has merit.
Financially, the company is in good shape, with strong cash flow and reasonable debt levels. However, its exposure to consumer spending cycles and a competitive industry landscape mean investors should monitor it closely.
For those seeking a low-risk dividend stock with a fair valuation, HBB could be a reasonable choice. But for investors who want consistent dividend hikes, there may be better options out there.
As with any investment, the key is ensuring it aligns with your financial goals and income strategy.
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