Furnish Your Portfolio With This Housing-Related Company

The Stocks Under $10 portfolio, which I co-manage with Stephen Guilfoyle, recently closed out a winning trade in home security company ADT Inc. , when it was announced that Alphabet would be taking a stake in the company as part of its strategy for the connected home. The reason we first added shares of ADT to the portfolio back in early April was very different, and it centered on the expected rebound in the housing market. I expected a rebound in the housing market for a few specific reasons: First, in response to the coronavirus pandemic and in a bid to prop up the economy, the Fed does what it has usually done in times of crisis and cut interest rates. Second, because of the pandemic's crippling impact on travel and leisure, the odds were pretty high that folks would look to vacation at home, most likely in second homes. Third, demand for housing outside of cities would likely increase, while demand inside major cities such as New York City would fall. I have to say that investment thesis played out even better than I expected and the Google investment was gravy. In recent weeks, 30-year mortgage rates have either hit or remained near all-time lows and what expected is happening -- a rebound in housing demand. Here's the thing -- buying a home isn't like buying a car, a smartphone or even a new piece of clothing. When a person moves into a new home, odds are there is other spending that will take place. It can take the form of new paint or wallpaper, flooring, furniture, consumer electronics, or more. If the new home has a renovation project before the new owners move in, more can be spent. In short, buying a new home is a multiplier on consumer spending and in aggregate a positive force for the economy. And it's one that dividend investors can participate in as well. The initial move by most investors when looking for housing plays is to turn to the publicly trade homebuilders, such as DR Horton , Toll Brothers and Pulte Group , but for those looking for enviable dividend yields, those three names aren't going to make do. So, let's return to that multiplier effect of home buying, and expand our gaze past homebuilders, to those companies that see the demand pull from a rising housing market like ADT did. That will turn up some interesting prospects. One of them is Haverty Furniture , which recently increased its quarterly dividend by almost 36% to $0.19 per share, up from the prior quarterly dividend of $0.14 per share. While the shares moved higher on the announcement, they still offer an annualized forward dividend yield of roughly 4.3%. Supporting that dividend increase are lofty year-over-year EPS growth expectations in the second half of the year and in 2021, fueled by the rebounding housing market and low interest rates that can help homebuyers stretch their spending. More houses and home furnishings, so to speak, for their money. I'd note this marks the eighth-consecutive increase for Haverty's dividend and with its payout ratio near 70%, we could very well see a few additional increases in the coming years. They may not be as large as the latest one, but we'll take them as the company inches closer to becoming a Dividend Contender. HVT Stats Forward yield: 4.69% Payable Sept. 9; for shareholders of record Aug. 24; ex-div Aug. 21. (GOOGL is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells this stock? Learn more now.)

Furnish Your Portfolio With This Housing-Related Company

Haverty Furniture recently increased its quarterly dividend by almost 36% to $0.19 per share, and is poised to get a boost from housing demand.

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