HP stock outlook after boosting annual dividend by 29%

on Oct 21, 2021
  • HP shares on Thursday spiked after boosting the annual dividend by 29%.
  • The company increased its dividend to $1.00 per share from $0.7752, implying a forward yield of 3.5%.
  • The stock trades at a compelling price-earnings ratio of 8.87.

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On Thursday, HP Inc. (NYSE:HPQ) shares spiked after the company raised its annual dividend yield by 29% on Wednesday after markets closed. The company increased its dividend to $1.00 per share from $0.7752, implying a forward dividend yield of 3.5%.

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The company also reiterated its fiscal year 2022 outlook provided during the Q3 earnings conference, with a non-GAAP diluted net EPS estimated to be in the range of $4.07 to $4.27, significantly ahead of the consensus Street forecast of $3.78. 

HP also said it expects to generate free cash flows of about $4.5 billion in the next fiscal year. It plans to return at least 100% of the free cash flows to shareholders.

Should you buy HP stock?

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From an investment perspective, HP shares trade at compelling trailing 12-month and forward P/E ratios of 8.86 and 7.55, respectively. Therefore, the stock seems to be an attractive option for value investors.

Moreover, analysts are optimistic about the company’s earnings growth prospects. The consensus Street forecasts expect its EPS to grow at an average annual rate of 16.52% over the next five years, making the stock an exciting option for growth investors.

Therefore, with the forward dividend yield of 3.5% also gaining the attention of dividend investors, HP will be an interesting option for different types of investors.

Source – TradingView

Technically, HP shares seem to be trading within a gently descending channel formation in the intraday chart. However, the stock has recently bounced off the trendline support to surge towards the 100-day moving average, attempting an upward breakout.

Therefore, with shares yet to reach overbought conditions, the current gains could continue for the foreseeable future. As a result, investors could target profits at $30.85 and $32.91, while $26.69 and $24.51 are support levels.

It’s not too late to buy HP

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In summary, although HP shares are up more than 13% since the 13th of October, the stock is yet to reach overbought conditions, thus leaving room for more upward movement.

Therefore, given its exciting valuation multiples, growth prospects and the recent dividend boost, it may not be too late to buy HP stock.

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