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Harley-Davidson’s 4.5% dividend yield could be the real deal

03/06/2019 · Harley Davidson (HOG) 

Investment Ideas Trade US

Man riding a Harley Davidson along a coastal road

Shifting demands of modern consumers haven’t been easy for iconic motorcycle manufacturer Harley Davidson. As its core baby boomer market ages, it has become crucial for the company to win a new generation of customers. The market seems unsure about its growth plans and the shares trade on just 11 times forward earnings. Could this be a buying opportunity?


President Trump's trade war with China is grabbing most of the headlines. But his efforts to penalise EU imports are causing problems for some US firms too. Notably motorcycle manufacturer Harley-Davidson (US: HOG) which recently warned that it expects tariff costs to rise from $23.7m (£18.8m) in 2018 to between $100m and $120m this year. The majority of this is said to relate to EU tariffs on US-manufactured motorcycles, which rose from 6% to 31% in June last year.

It's not great news, but the company expects to mitigate these extra costs by the end of 2019. Even before the tariffs were announced, it had planned an Asian manufacturing plant, which is now open and is expected to cut costs for export models.

We think the real story here could be Harley-Davidson's efforts to reinvent itself while working through a cyclical slowdown. So, are the firm's depressed share price and fat dividend yield an opportunity for investors to buy into an iconic…

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