Harley-Davidson Hikes Dividend: Should You Hold or Fold the Stock?

Core Viewpoint - Harley-Davidson has announced a cash dividend increase of 4.3% for Q1 2025, reflecting its financial strength and commitment to shareholder value, despite recent stock underperformance [1][2]. Financial Performance - The dividend is set at 18 cents per share, with a forward yield of 2.8%, payable on March 14, 2025, to shareholders of record as of February 28, 2025 [1]. - Harley-Davidson shares have declined by 30.7% over the past 12 months, underperforming the Zacks Auto-Tires-Trucks sector's growth of 11.3% and the Zacks Automotive – Domestic industry's return of 25.9% [2][3]. - The S&P 500 index has increased by 23.2% during the same period [2]. Market Position and Growth - The company is enhancing its market position through an innovative product portfolio, with a nearly 5% growth in the U.S. driven by the successful launch of the '24 Street Glide and Road Glide models, pushing market share to nearly 75% [6]. - Six new cruisers and updates to existing models are improving Harley-Davidson's competitive edge [7]. - Strategic marketing efforts and collaborations are increasing brand visibility and consumer engagement [8]. - The LiveWire unit, focusing on e-bikes, has seen a 46% year-over-year increase in global retail sales, maintaining a 65% market share in the U.S. electric motorcycle segment [9]. Valuation - Harley-Davidson shares are currently considered undervalued, with a Value Score of A, trading at a forward price/sales ratio of 0.79x compared to the sector's 1.48x [10]. 2025 Outlook - The company anticipates flat retail sales for 2025, with a 5% decline in wholesale shipments as it manages dealer inventory [13]. - Global inventory levels are expected to decrease by over 10% by the end of 2025, with a 30% reduction in the first half [13]. - Revenue projections for Harley-Davidson Motor Company are expected to be flat to down 5%, while Harley-Davidson Financial Services anticipates a 10% to 15% drop in operating income [14]. - The Zacks Consensus Estimate for 2025 revenues is $4.14 billion, indicating a decline of 0.14$3.44, down 18.1% over the past 30 days [16].