Daily Stock Pick: H&R Block
I'm now looking for a third consumer cyclical sector representative for my new Ivy portfolio.
That cyclicals sector includes twenty-eight industries ranging from Advertising Agencies to Apparel, Autos, Broadcasting, Department Stores, Gambling, Leisure, Lodging, Packaging, Personal Services, Shoes, Restaurants, Rubber, Plastics, Textiles, and all such consumer aimed enterprises.
Today I'm reviewing a mid-cap personal services company, named H&R Block Inc Its trading ticker symbol is HRB.
H&R Block Inc is a consumer tax services provider. It provides assisted income tax return preparation, digital do-it-yourself tax solutions and other services and products related to income tax return preparation to the public in the United States, Canada, and Australia.
The company offers assisted income tax return preparation and related services through a system of retail offices operated directly by the company or by franchisees.
It also develops and markets DIY income tax preparation software online, as well as through third-party retail stores and direct mail; and provides DIY tax services and electronic filing.
In addition, the company develops and offers applications for mobile devices, which offer tax return preparation solutions and related services and products.
Further, it provides refund transfers, H&R Block Emerald Advance lines of credit, H&R Block Emerald Prepaid MasterCard, Peace of Mind Extended Service Plan, Tax Identity Shield, and refund advance loans; POM, an Instant Cash Back refund option; and H&R Block Pay with a Refund option.
H&R Block, Inc. was founded in 1946 and is headquartered in Kansas City, Missouri.
I use three key data points to gauge the value of any dividend equity like H&R Block Inc:
(1) Price
(2) Dividends
(3) Returns
Besides those three, several other keys will finally unlock an equity or fund in which to invest.
Those first three primary keys, however, best tell whether a company has made, is making, and will make money.
HRB Price
H&R Block price per share closed at $25.91 Friday. A year ago its price was $26.72. So price dropped $0.81 per share last year, or about 3%.
Assuming H&R Block's stock trades in the range of $20 to $25 next year, Block's recent $25.91 price could pick up by $2.09 and go to $28.00 by late-January, 2020.
HRB Dividends
Block's most recent Quarterly dividend was $0.25 paid January 2nd.
That $0.25 quarterly payout equates to a $1.00 annual payout and a yield of 3.85% at Friday's $25.91 closing price.
Gains For HRB?
Adding the $1.00 annual estimated dividend to my estimated $2.09 annual price estimate for H&R Block Inc shows a $3.09 potential gross annual gain, per share, which will be reduced by costs to trade those shares.
Say we put a little over $1,000.00 today at the $25.91 recent stock price would buy us 39 Block shares.
A $10 broker fee paid half at purchase and half at sale costs $0.18 per share.
Subtract that $0.18 brokerage cost from the estimated $3.09 gross annual gain leaves a net gain of $2.91 X 39 shares
= $113.49
for about a 11% net gain on a $1,010.49 investment.
Therefore, H&R Block Inc whose trading ticker symbol is HRB now shows a possible net gain of over 11% including its estimated 3.85% dividend yield.
Nine brokers cover this stock:
One broker says "Buy" Block
One thinks Block will "outperform".
Six say "Hold" your "Block shares
One says "Sell" off the old Block.
Guess who forgot to do his taxes?
Therefore, you can look at H&R Block Inc and see it has made money, is making money, and could make 11% over the next year including it's 3.95% estimated dividend yield. It could be more, it could be less.
The above speculation is based on past year performance. The actual results remain to be seen to determine if H&R Block Inc is worth your time and money.