James Halstead (LSE:JHD) isn’t the most famous or widely-covered stock on the market. But it has an excellent record when it comes to dividends and it’s trading at a 52-week low.
The firm manufactures and distributes industrial flooring. And while things are tough in the industry at the moment, this could be the time to consider buying shares in a quality business.
Industrial flooring
Industrial flooring doesn’t seem particularly exciting. And compared with a lot of things – or indeed, almost all other things – it isn’t, but this can be a good thing when it comes to dividend stocks.
Sometimes, businesses that aren’t particularly high-octane can be durable and resilient investments. And that’s been the case with James Halstead.
The company’s Polyflor brand sets the standard in industrial flooring. Its products are known for their high levels of slip-resistance, durability, and the ability to withstand regular clearing.
In some cases, such as hospitals, these characteristics are even specified by regulation. This creates a barrier to entry for competitors and helps James Halstead maintain its leading market position.
Why has the stock been struggling?
Despite some clear strengths, James Halstead’s share price has been struggling in 2025. And the reason for this is that sales have been unusually weak.
In its January trading update, the firm reported a decline in revenues compared to the year before. Management attributed this to weak customer confidence in a difficult environment.
Despite this, the company did offer some encouraging guidance for investors. It identified a backlog of repairs and renewals in healthcare and education as strong signs for future growth.
I think that gives some reason for optimism going forward. Specifically, it suggests that the challenges James Halstead is facing are cyclical, rather than permanent.
Long-term investing
From a long-term perspective, I’m not concerned about the current environment – in fact, I see it as a potential buying opportunity. But there is something else that I’m mindful of.
Over the last 10 years, James Halstead has distributed roughly 75% of its net income. Given this, the fact it has managed to increase its dividend by around 60% is quite impressive.
There is, however, something that I think is worth keeping an eye on. Since 2015, the return on equity (ROE) the company generates has been declining steadily from 33% to 23%.
This is a sign the firm hasn’t managed to be as efficient with the cash it has retained as it was a decade ago. And that’s something investors should keep an eye on.
A stock to consider buying
To my mind, James Halstead is a quality business that doesn’t get the attention it deserves. And that’s a good combination from an investment perspective.
As far as I can see, only one analyst covers the stock and has a price target 117% above the current level. I’m not sure I’d go that far, but I definitely think it looks attractive.
The dividend yield is approaching 6% and that’s unusually low for this stock. With that in mind, I think passive income investors should seriously consider buying it at today’s prices.
This post was originally published on Motley Fool
