Why I’m Bullish on Natural Health Trends Corp.
Multi-level marketing companies (MLMs) are often frowned upon by some as an outdated pyramid scheme that only benefits those at the top. But the appeal of making passive income is not lost on millions of people, including former-President Donald Trump, who, over the years, has made millions of dollars promoting ACN Inc, a MLM marketing firm.
In addition to endorsing ACN, Trump also featured it twice on his reality show, “The Celebrity Apprentice.” (Source: “Donald Trump Made Millions From Multilevel Marketing Firm,” The Wall Street Journal, last accessed October 15, 2024.)
While most multi-level marketers won’t rake in millions of dollars, the industry is quite lucrative. The global MLM industry, which was worth $201.0 billion in 2022, is expected to hit $329.0 billion by the end of 2030, expanding at a compound annual growth rate (CAGR) of roughly 6.5%. (Source: “MLM Market Size, Share, Trends, Growth 2030,” Zion Market Research, last accessed October 15, 2024.)
Again, few MLM sellers make a lot of money, but the huge number of distributors each company has can help corporate generate a lot of money. And the company’s revenue and bottom line are more important than how much an individual distributor is making.
Some of the bigger MLM companies include Herbalife Nutrition Ltd (NYSE:HLF), Nu Skin Enterprises, Inc. (NYSE:NUS), Amway, and Mary Kay Cosmetics.
One overlooked MLM company that provides investors with a reliable dividend and continues to have a solid outlook is Natural Health Trends Corp. (NASDAQ:NHTC).
Natural Health Trends is one of the smaller, under-the-radar MLMs operating today. With a member base of over 31,000 people, it is a global company, with products available in nearly 50 countries and offices in North America, China, South Korea, Japan, Russia, and Europe. (Source: “Corporate Fact Sheet,” NHT Global, Inc., last accessed October 15, 2024.)
Here in the U.S., Natural Health Trends sells personal care, wellness, and quality of life products under the “NHT Global” brand.
Swings to Q2 Profitability
For the second quarter ended June 30, Natural Health Trends reported revenue of $10.5 million, which was flat on an annual basis. (Source: “Natural Health Trends Reports Second Quarter 2024 Financial Results,” Natural Health Trends Corp., July 31, 2024.)
The company’s second-quarter net income was $173,000, or $0.02 per share, up from a second-quarter 2023 net loss of $219,000, or $0.02 per share. It ended the quarter with total cash and equivalents of $48.7 million.
Commenting on the results, Chris Sharng, the company’s president, said, “Our results indicate that the programs, promotions and incentives we’ve implemented this year have been effective and are performing as expected, maintaining engagement and driving customer satisfaction.”
“In the second half of the year we will continue to execute our strategic plans with an emphasis on comprehensive training, collaborative coordination between our staff, field leaders and members, and implementation of brand building initiatives to take advantage of market opportunities.”
NHTC Stock Maintains Quarterly Dividend of $0.20 Per Share
Thanks to its healthy balance sheet, Natural Health has been able to provide shareholders with a reliable dividend since 2014. (Source: “Dividend History,” Nasdaq, last accessed October 15, 2024.)
Most recently, in July, the company’s board of directors declared a quarterly cash dividend of $0.20 per share, or $0.80 on an annual basis, for a high-yield dividend of 14.06%.
Natural Health also has a history of paying out special dividends. In fact, it has paid nine of them since 2016, with the last special dividend being $0.08 per share in February 2019.
When it comes to NHTC stock, right now, dividends have been a big help. Natural Health Trends stock is actually down 4.5% on an annual basis, but with dividends reinvested, the company’s total year-over-year return is 18.2%. On a year-to-date basis, NHTC stock is also up 5.9%.
Part of the 4.5% non-dividend-adjusted share price drop in 2024 is a result of a sell-off in NHTC stock in late September.
What happened?
Nothing of consequence. The company hasn’t had any press releases and there have been no analyst downgrades, etc.
Before the drop in September, NHTC stock was trading at its highest level in five years. For technical traders, after the recent pullback, the stock has found support at $5.40 per share, which was also a resistance level back in February 2023. The new resistance level for NHTC stock is $6.80 per share.
Chart courtesy of StockCharts.com
The Lowdown on NHTC Stock
Natural Health Trends Corp is a direct selling company that has a history of providing investors with a reliable dividend and special distributions. It continues to have a solid balance sheet. Moreover, the company swung to second-quarter profitability and cash flows from operations were positive for the second consecutive quarter.
Following a bullish run in 2024, NHTC stock experienced an unwarranted sell-off in late September, so it is currently sitting in an attractive range. Patient contrarian investors waiting to see if NHTC stock rebounds can sit back and enjoy a reliable, ultra-high-yield dividend.
