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Report: Thor Grows Dividend in Slow Economy

Confidence is a huge economic driver in the RV business. According to a report by NASDAQ.com, if consumers are uncertain about their own situations, they don’t go out and buy an RV.

With the U.S. economy still limping, Thor Industries Inc. has naturally struggled with earnings stability. The five-year stability factor is a 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 Inc. (PATK ), though thinly traded, has a Composite Rating of 98. Drew Industries Inc. (DW), which supplies manufacturers 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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