At 10.2%, is this ASX 200 share a high-yield bargain?

It’s not too often you find an ASX 200 dividend share sporting a high yield like 8.3%. Dividend yields are a direct result of a company’s share price. So it’s unusual to see investors allow a good-quality company’s share price to get so low that it jacks up its dividend yield to 8.3%. 

Yet that’s exactly the situation facing investors of famous ASX 200 retail share Harvey Norman Holdings Limited (ASX: HVN).

Harvey Norman hasn’t yet paid out its 2023 interim dividend. That payday for investors will come on 1 May next month. Investors are in line to net themselves 13 cents per share, fully franked. Together with the final dividend worth 17.5 cents per share that investors received back in November, Harvey Norman’s annual dividend now stands at a fully-franked 30.5 cents per share.

At market close on Friday, Harvey Norman shares finished trading at $3.67, down 1.08%:

At this share price, Havey Norman’s 30.5 cents per share in dividends gives this company a dividend yield of 10.22% right now. 

So is this ASX 200 share a high-yield bargain that shouldn’t be ignored?

Is this ASX 200 retail share a bargain buy right now?

Well, Harvey Norman shares certainly look cheap, just going off the company’s metrics. At $3.67, Harvey Norman sports a price-to-earnings (P/E) ratio of just 6.14.

By way of comparison, Commonwealth Bank of Australia (ASX: CBA) shares currently have a P/E ratio of 17.15, while the Coles Group Ltd (ASX: COL) share price is at 21.95.

But who better to judge if Harvey Norman shares are a bargain buy than the man who co-founded the company, Gerry Harvey?

Well, Harvey clearly thinks his own company is being undervalued by the markets. Late last month, we reported on how Harvey has been on an absolute buying spree of late. He had picked up more than $76 million worth of Harvey Norman shares over 2023 alone by the end of March.

And he hasn’t seemed to slow down either. An ASX filing from 3 April shows that Harvey made yet another purchase of 642,000 shares, close to $1 million worth, on 29 March.

So Harvey clearly thinks his own company is well in the bargain buy zone right now. But he’s not the only one. As we covered last week, ASX broker Goldman Sachs is another Harvey Norman bull. Goldman commented the following on its buy rating on Harvey Norman shares:

Harvey Norman holds a unique position within the electronics and appliances retail industry as a result of its franchise model of operations in Australia, property portfolio and regional exposure. While we do not view HVN as the most advanced retailer on digitalization, we view HVN as a more defensive option that is under-valued in the home category.

The broker has a 12-month share price target of $4.70 for the company.

So there’s more than one expert who is clearly seeing some value in this ASX 200 retail share right now.

The post At 10.2%, is this ASX 200 share a high-yield bargain? appeared first on The Motley Fool Australia.

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More reading

• This iconic ASX 200 retail share is down 28% over the past year. Is it time to buy?
• Top ASX dividend shares to buy in April 2023
• Why Appen, Harvey Norman, Healthco, and Lake shares are dropping today
• Why is the Harvey Norman share price diving on Friday?
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Harvey Norman. The Motley Fool Australia has positions in and has recommended Coles Group and Harvey Norman. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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