JB Hi-Fi Limited's (ASX: JBH) share price has been stuck in a general downtrend over the last six months or so, but has rebounded strongly in the past week. They're up 9.7% in that time, compared to a 5% lift for the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
At their current price however, the shares are also offering a 4.9% fully franked dividend yield. Grossed to 7.1%, that is a very attractive yield in an otherwise low interest rate environment, where you'd be lucky to get a 3% return from money in a term deposit.
JB Hi-Fi is one of Australia's leading specialty discount retailers of electronics and home entertainment products, ranging from CDs and DVDs to televisions and laptops. It has also recently pushed into the white goods industry through its 'HOME' format stores which it is quickly rolling out across its network.
What separates JB Hi-Fi from many other retailers, including Myer Holdings Ltd (ASX: MYR), has been its ability to adapt to changing trends (again, with the expansion of its 'HOME' format stores), its ability to keep costs low and to maintain reasonable earnings growth.
Earnings are expected to continue growing strongly this financial year (FY16) and through to FY18, according to Morningstar data, which should allow for decent growth in dividend payouts as well.
Although there are risks associated with an investment in JB Hi-Fi today, including a severe downturn in the local economy which could impact sales and hinder its store rollout plans, it is clear there are also compelling reasons to buy. With a share price of $18.96, JB Hi-Fi could make for a solid addition to your portfolio today.
