THO: A Dividend Trap with a Bullet, Aimed at Your Portfolio

Investors, buckle up. Today we're diving into a company that's flashing all the warning signs of a dividend trap: THOR Industries (NYSE: THO). This recreational vehicle manufacturer's stock is perched on a precarious ledge—overvalued, underperforming, and primed for a dividend cut that could send shares tumbling. Let me break down why this is a sell now, before the music stops.

The Dividend Yield: A Race to the Bottom (and Losing)

Let's start with the most glaring issue: THO's dividend yield. As of June 2025, it's 2.34%—but here's the kicker. The 10-year U.S. Treasury yield is 4.38%. That means investors are losing money in real terms by choosing THO over a risk-free Treasury bond. This is not a typo. When a dividend yield dips below the risk-free rate, it's a screaming red flag. You're getting paid less to take on more risk—a recipe for disaster.

Valuation: A Castle Built on Sand

THO's P/E ratio is 26.2x, which sounds pricey even in a frothy market. But here's the catch: earnings are crumbling. In Q1 2025, EPS plunged to $0.26, missing estimates by a mile ($0.72 expected). The company's debt/equity ratio of 29.36x isn't helping either. With an inverted yield curve signaling recession risks—and RVs being a luxury during tough times—this valuation is a mirage.

Growth Expectations: Bigger Than Texas, Smaller Than Reality

Analysts are pricing in 4.76% dividend growth for THO in 2025. But let's get real: The RV market is cyclical, and THO's European operations are already battling inflation and supply-chain headwinds. The company's net income dropped to $265.31M (TTM), down from healthier levels in 2023. If earnings keep shrinking, that dividend isn't just a growth pipe dream—it's a death sentence.

The Write-Off Whisper

Don't forget: THO's stock is already in a free fall. From a 52-week high of $129.31, it's now trading at $85.36—a 34% decline. Analysts' “Moderate Buy” rating? That's based on a $102 price target, which is already below today's price. The writing's on the wall. When the dividend cut comes—and it will—the shares could drop to the $70s, matching the lowest analyst target.

Time to Exit This Trap—Now

This isn't a “hold for the long term” story. THO is a classic dividend trap: a fading payout, overvalued stock, and a business model that's about to collide with recessionary headwinds. The math is simple: If you're in THO, sell. If you're on the sidelines, stay there.

Action Items:
1. Sell immediately if you own THO.
2. Avoid the “dividend safety” myth—Treasury bonds are safer today.
3. Watch for the dividend announcement—when it comes, the sell-off will be swift.

This isn't just about THO. It's a lesson in avoiding companies that trade on hope, not fundamentals. The dividend train's leaving the station—and it's heading straight for a crash. Don't be on board.