RV Firm Thor Grows Dividend Despite Lame U.S. Economy

Jack Humphrey, Regulatory journalist
October 01, 2012 /

Confidence is a huge economic driver in the RV business.

If consumers are uncertain about their own situations, they don’t go out and buy an RV.

With the U.S. economy limping,Thor Industries ( THO ) has naturally struggled with earnings stability. The five-year stability factor is a mediocre 47 on a scale of 0 (calm) to 99 (erratic).

Yet Thor has reassured investors with a solid dividend record. During the recession, the dividend was never reduced. Afterward, increases grew aggressively. The quarterly payout has been raised from 7 cents a share in mid-2010 to 18 cents a share for a 2% annual yield.

This is impressive when you consider that the U.S. has not enjoyed a textbook economic recovery. It’s been more of a footnote recovery — hard to find and hard to see.

Thor’s business involves several segments. Towable RVs accounted for 74% of revenue in fiscal 2012 ended in July. Buses and ambulances deliver 14% of revenue, and motorized RVs 12%.

As of June, Thor’s U.S. market share in the towable sector was 38% and in motorized RVs, 21%. For small and midsize buses, market share is about 35%. The buses are mostly sold to government entities.

Thor is not a lone wolf. The RV stocks have some winners.Patrick Industries ( PATK ), though thinly traded, has a Composite Rating of 98.Drew Industries ( DW ), which supplies Thor with windows, doors and other items, has a Composite Rating of 97. Thor’s Composite Rating also is 97.

The Composite Rating combines all five IBD ratings into a single number.

Thor’s industry group was No. 39 among 197 groups as of Friday’s IBD. Six weeks ago, the group was No. 92. The group, though, includes manufactured home companies — something that Thor does not get into.

The RV business traditionally has had low barriers to entry, but increased regulations have made that less true. Also, developing a dealer network can pose barriers to entry.

Demographics look favorable. By 2020, the number of Americans age 55 to 64 will be 73% higher than in 2000, according to consulting firm AgeWave.


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