The price of Hanesbrands Inc. (HBI) shares is about 40% lower than it was two years ago even though profits are currently about 30% higher. So I decided to purchase 24 share of HBI to add to my nonPension portfolio.
There are no guarantees about what will happen to future earnings at HBI, but they are currently expected to increase significantly over the next few years. There are no guarantees about what will happen to the P/E ratio over the next few years, but the current P/E is significant lower than normal. there are no guarantees that the dividend payout will continue to increase annually as it has done over the past few years, but the payout ratio is currently low with room to grow.
I will not throw a pity party if earnings fall in the near future, because I cannot predict what will happen. I will not worry if the price falls from here, because I cannot expect for market forces to drive the price one way or another in advance. I will not be in a state of despair if the dividend is frozen or cut, because that is always a possibility. But if I look at the history of HBI, I expect the earnings will rise, price will rise, and dividends will rise over time, so I think my purchase is a good one.
The average monthly dividend income is will be about $1.20, which is considerably lower than the income I received from CAT before I sold it last week, but I have a little extra cash because of that sale, and I expect more price appreciation and dividend growth from HBI than I do from CAT. Time will tell if this sell/buy combination was a good one or not. I can't wait to find out!
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