Bassett Furniture: Buy Now, Sit Back, and Collect Dividends

Key Points

• Furniture companies like Bassett offer high yields and relative safety, trading near long-term lows.
• Institutional activity reveals these stocks are being accumulated in 2025.
• Housing market tailwinds may form in 2026, driving accelerated growth and sustaining the capital return outlook. 

Basset Furniture Industries' NASDAQ: BSET Q3 results affirm its strong position in an industry poised for a rebound. The furniture industry has struggled for years as high interest rates clamped down on housing activity, but the screws are loosening. The FOMC cut rates once already in 2025 and will likely do so twice more by year’s end, and at least once more by the middle of next year, potentially unsticking a logjam in the housing market. Even so, lower rates will encourage consumers who don’t relocate to enhance their living conditions, providing a boost for the high-yielding furniture and home furnishings industry. 

Until then, the Q3 results reveal that growth was sustained for a second quarter and accelerated, suggesting strength across the industry. Basset’s revenue grew by 5.9%, 7.3% when adjusted for divestiture, and outpaced MarketBeat’s reported consensus figure. Gains were seen in the wholesale and retail segments, led by a 9.8% increase in retail and compounded by margin strengths. 

Margin strength is critical, as this company and industry are known for balance sheet health, cash flow, and capital returns. One-offs are in the mix, but strength is seen nonetheless, including profits versus last year’s loss, driven by gross and operating margin improvements. The crucial detail is that the $\\9 cents in adjusted earnings is well above last year’s 52-cent loss, and is expected to remain positive in upcoming quarters. The dividend yields an annualized rate of 5.12% as of early October.

Institutions Are Buying Furniture Stocks in 2025

MarketBeat’s data reveals that institutions are buying furniture stocks in 2025. The data show institutional groups ranging from small, private wealth managers to large, fund-oriented firms buying on balance at approximately 2-to-1, and the activity is not limited to Bassett Furniture Industries. High-yielding peers, including Haverty Furniture Company NYSE: HVT and Ethan Allen Interiors NYSE: ETD, are also being accumulated at a robust pace, benefiting from strong market support driven by high institutional ownership levels. Ethan Allen is the tightest held at 84%, followed by 80% institutional interest in Haverty and a small but still significant 55% in Bassett. 

The price action in BSET, HVT, and ETD stocks is not aggressively bullish but reflects solid market support, as indicated by institutional activity. ETD is the market favorite, trading at a higher price point within the longer-term trading range, though it has not been immune to the furniture market malaise. At worst, these stocks will wallow near their current levels through the end of next year, paying their high-yielding dividends, while, at best, tailwinds in the housing market will lift market sentiment and the outlook for earnings, driving these high-yielding stocks to long-term highs.

Bassett’s Balance Sheet Is a Fortress

The company did not provide specific guidance but remained optimistic about activity despite macroeconomic headwinds. Its US-centric manufacturing footprint offers flexibility and enables it to introduce new products quickly, which is driving growth. Among the latest efforts are the introduction and expansion of fully customizable product offerings, now available at nearly 60 locations, and a more aggressive omnichannel presence. Regarding business growth, the company does not expect it to pick up significantly until the housing market shows signs of recovery, but it is expecting to sustain margins. 

The only bad news in the report is that cash flow is exceeding income. However, the imbalance is slight and expected to ease in upcoming quarters and revert to surplus, potentially as soon as the back half of 2026, leaving the company in a fortress-like financial condition. Basset’s balance sheet highlights from Q3 include reduced assets and liabilities linked to its divestitures, a subsequent slight reduction in shareholder equity, and ultra-low leverage, with total liabilities less than 1x equity and 0.5x assets.