Updated 3/10/25
HP Inc. (NYSE: HPQ) is a well-known player in the tech industry, recognized for its personal computers, printers, and related services. While the company operates in a fiercely competitive space, it has built a reputation for generating solid cash flow, maintaining cost discipline, and rewarding shareholders with consistent dividends.
For dividend investors, HPQ offers a mix of a respectable yield, steady payouts, and moderate growth potential. Let’s take a closer look at how this stock measures up for those focused on income generation.
Key Dividend Metrics
📌 Dividend Yield: 3.79% (Forward)
📌 Annual Dividend Payout: $1.16 per share
📌 Payout Ratio: 40.15%
📌 5-Year Average Dividend Yield: 3.21%
📌 Dividend Growth: Modest but steady
📌 Ex-Dividend Date: March 12, 2025
📌 Next Dividend Payment: April 2, 2025
A nearly 4% dividend yield makes HPQ a compelling option for income-focused investors, especially in a sector where dividends are not always a priority.
Dividend Overview
HP has consistently returned cash to shareholders through dividends and stock buybacks. The forward dividend yield of 3.79% is higher than the company’s five-year average, making it particularly attractive for those seeking reliable income.
With a trailing dividend yield of 3.65%, HPQ has demonstrated a strong commitment to maintaining payouts, while a payout ratio of 40.15% suggests there’s still room for dividend growth. This balanced approach allows the company to reward investors without compromising financial flexibility.
The next ex-dividend date is set for March 12, 2025, meaning investors need to own the stock before then to receive the upcoming dividend on April 2, 2025.
Dividend Growth and Safety
HPQ’s dividend growth has been steady, rather than aggressive. While it may not be among the top dividend growth stocks, it does offer predictable increases, which is valuable for long-term income investors.
Dividend safety is a crucial factor, and HPQ’s 40.15% payout ratio suggests the company isn’t overextending itself. Cash flow generation remains strong, with levered free cash flow of $2.9 billion providing a comfortable buffer. Even with a recent 9.2% drop in quarterly earnings, HP still has the financial strength to maintain dividends without strain.
Another factor worth noting is HPQ’s commitment to share buybacks, which reduces the number of outstanding shares over time. This strategy indirectly supports dividend growth by ensuring per-share payouts remain sustainable.
Chart Analysis
Price Action and Moving Averages
The stock has been in a downward trend after peaking in the latter half of the year. The 50-day moving average, which had been trending above the 200-day moving average for most of the previous uptrend, has now crossed below it. This type of crossover often signals a shift in momentum, indicating that the stock may be transitioning into a more bearish phase.
The recent drop brought the price below both the 50-day and 200-day moving averages, suggesting that sellers have taken control. However, there has been a slight rebound off the lows, with the stock closing at 30.54 after dipping to around 29.63 earlier in the session.
Volume and Market Participation
Volume has picked up during the recent selloff, with a notable spike in trading activity as the stock broke below key support levels. This kind of volume surge typically indicates strong conviction among sellers, but the recent bounce suggests that buyers are starting to step in at lower prices.
There were a few standout volume bars over the past months, especially during sharp declines, which implies that institutional players may have been exiting positions. At the same time, the recent increase in volume on the latest rebound could hint at short covering or early bottom-fishing by investors.
Relative Strength Index (RSI)
The RSI, which measures momentum, had dipped into oversold territory before turning slightly higher. A reading below 30 generally suggests that a stock is oversold and could be due for a short-term bounce. The RSI now appears to be curling back up, which often signals a potential relief rally.
If the RSI continues to rise, it could indicate that bearish momentum is easing. However, if it fails to break out of the lower range, it may suggest that any upside movement is temporary and that selling pressure could resume.
Support and Resistance Levels
The stock recently tested the 30.00 level, which appears to be acting as near-term support. If it can hold above this area, there is a possibility of a short-term rally back toward the 50-day moving average around 32.50.
On the upside, resistance is likely near the 200-day moving average, which is currently around 34.50. If the stock attempts to recover, this level could be a key test to determine whether the longer-term trend remains bearish or if a reversal is taking shape.
On the downside, if 30.00 fails to hold, the next major area of support appears to be near the previous lows around 27.50. A break below that level could invite further selling pressure.
Analyst Ratings
📝 HP Inc. (NYSE: HPQ) has seen a range of analyst opinions recently, reflecting both optimism and caution. As of March 10, 2025, the stock holds a consensus “Hold” rating among analysts, with an average 12-month price target of $36.88, suggesting potential upside from its current trading levels.
🔼 Upgrades
🏦 Wells Fargo & Company raised its price target for HPQ from $30 to $35 on February 20, 2025, while maintaining an “Underweight” rating. This adjustment reflects a slightly more optimistic view of HP’s valuation, possibly due to improving financial performance or shifting market dynamics that favor the company’s revenue streams. Analysts cited cost-cutting initiatives and stabilization in the PC market as potential tailwinds.
🔽 Downgrades
📉 HSBC downgraded HPQ from a “Buy” to a “Hold” on November 29, 2024, reducing its price target from $39 to $38. The decision was based on concerns surrounding slowing consumer demand in the PC and printer segments, as well as ongoing macroeconomic uncertainties that could pressure margins. The downgrade reflects a more cautious stance, with analysts questioning whether HP can sustain earnings growth in an increasingly competitive environment.
📊 These mixed analyst perspectives highlight a balanced outlook on HP Inc., weighing potential growth opportunities against industry challenges. The stock remains a closely watched player in the tech space, with investor sentiment shaped by both cautious and bullish views.
Earnings Report Summary
HP Inc. recently shared its latest earnings report, giving investors a closer look at how the company is performing. The numbers show a mix of positives and challenges, with revenue coming in at $13.5 billion, up about 2% from the same period last year. A big part of that growth came from the Personal Systems segment, which includes PCs and related products, seeing a solid 5% increase. On the other hand, the Printing division lagged slightly, slipping by about 1% when adjusted for currency fluctuations.
Earnings per share landed at $0.74 for the quarter, matching expectations but still down 9% from the $0.81 reported a year ago. While revenue is climbing, profitability remains under pressure, which isn’t surprising given the current market environment.
To help improve margins and streamline operations, HP announced an expansion of its cost-cutting efforts. The company plans to lay off up to 2,000 more employees, pushing the total number of job cuts under its restructuring plan to nearly 9,000. These layoffs are expected to save around $1.9 billion by the end of the fiscal year, though the restructuring itself will cost HP about $1.2 billion in related charges.
Another key issue HP addressed was the ongoing challenge of U.S. tariffs on products made in China. These tariffs could put additional pressure on profitability in the months ahead, so HP is making moves to shift production away from China. By the end of the fiscal year, the company expects over 90% of the products it sells in North America to be made elsewhere, a significant step in reducing risk from trade tensions.
Looking ahead, HP provided guidance for the next quarter, estimating earnings per share to land between $0.75 and $0.85. For the full fiscal year, the company projects EPS in the range of $3.45 to $3.75. These numbers suggest HP is being realistic about both opportunities and challenges, balancing optimism with a cautious approach.
Overall, the report highlights some encouraging trends, but also reinforces that HP still has work to do. The combination of cost-cutting, supply chain adjustments, and navigating market headwinds will be crucial in determining how the company performs moving forward.
Financial Health and Stability
HP’s financial standing presents both strengths and weaknesses. The company generates solid cash flow, but it also carries a significant amount of debt, which investors should keep an eye on.
- Total Cash: $2.89 billion
- Total Debt: $10.9 billion
- Current Ratio: 0.72 (below the ideal threshold of 1.0)
While the debt load is on the higher side, HP’s ability to generate operating cash flow of $4 billion helps offset concerns. The company has enough liquidity to sustain its dividend payments, though it will need to carefully manage its obligations in the long run.
Profitability metrics are reasonable, with a return on assets of 6.87% and a profit margin of 5.05%. While not the highest in the sector, these figures indicate HP is operating efficiently despite market challenges.
Valuation and Stock Performance
- Current Price: $29.98
- 52-Week Range: $27.43 – $39.80
- 200-Day Moving Average: $34.91
- 50-Day Moving Average: $32.78
HPQ is currently trading near the lower end of its 52-week range, which could present a potential opportunity for value-focused investors. The stock has declined from its 200-day moving average, indicating some recent downward pressure, though this could also mean an attractive entry point for those with a long-term outlook.
From a valuation standpoint, HPQ appears to be trading at reasonable levels.
- Trailing P/E: 10.99
- Forward P/E: 8.53
- PEG Ratio: 1.08
- Enterprise Value/EBITDA: 8.00
A forward P/E below 9 suggests that HPQ could be undervalued, especially if earnings remain stable. The PEG ratio of 1.08 indicates that the stock is priced fairly in relation to its expected growth.
Risks and Considerations
While HPQ offers a solid dividend profile, investors should be aware of some risks that could impact its long-term potential.
The personal computer market is facing headwinds as global demand slows. Although HP has expanded into services and peripherals, a significant portion of its revenue still depends on traditional hardware sales.
Another concern is the company’s debt. With total debt of $10.9 billion, HP needs to ensure it can service its obligations while maintaining dividend payouts. Higher interest rates could make this more challenging over time.
Earnings pressure is also worth watching. The company’s recent quarterly earnings decline of 9.2% could signal potential headwinds ahead. If profitability continues to shrink, HPQ may need to slow its dividend growth rate.
Short interest in HPQ stock is around 4.08% of the float, indicating that some investors are betting on further declines. While this isn’t an alarmingly high percentage, it does suggest some skepticism in the market.
Lastly, since HPQ operates in the technology sector, it may experience higher volatility than traditional dividend stocks in sectors like utilities or consumer staples. While its dividend helps provide some stability, investors should be prepared for stock price fluctuations.
Final Thoughts
HP Inc. offers a strong dividend yield, steady payout growth, and a sustainable payout ratio, making it an appealing option for income-focused investors. While the stock may not deliver rapid dividend increases, its reliable distributions and reasonable valuation make it a solid choice for those looking for income in the tech sector.
The company’s financials suggest that dividends are well-covered, thanks to strong cash flow generation. However, challenges such as a slowing PC market, a high debt load, and recent earnings declines could present obstacles to future growth.
For investors who value steady dividends with a moderate yield, HPQ provides a balanced mix of income and stability. While it isn’t a high-growth dividend stock, its combination of shareholder returns and cost efficiency makes it worth considering for a well-diversified dividend portfolio.
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