H&R Block Inc. (HRB) is a tax-services company founded in 1955 that provides assisted and do-it-yourself tax preparation through about 8,600 company-owned and franchised offices, along with online, mobile, virtual, and desktop platforms. We project an annual return of 22% through fiscal 2032, writes Ben Reynolds, editor of Sure Dividend Core Newsletter.
H&R Block prepared 22.3 million tax returns in fiscal 2026. The stock currently trades with a $5.1 billion market cap.
On Aug. 11, H&R Block reported its fourth-quarter and full-year fiscal 2026 results for the year ended June 30. Fourth-quarter revenue increased 3% to $1.14 billion, while adjusted earnings per share (EPS) rose 4.8% to $2.38.
Growth was driven by higher pricing and company-owned volume in US assisted tax preparation, increased international revenue, and stronger Wave subscription and payments activity. For fiscal 2027, management expects revenue of $4.11 billion to $4.16 billion and adjusted EPS of $6.04 to $6.24.
H&R Block is financially stable. The company holds a BBB- credit rating from S&P with a stable outlook. Its dividend appears reasonably secure, with the payout ratio expected to remain close to 30% in fiscal 2027. We also expect H&R Block to continue reducing its share count by about 6% per year, consistent with its long track record of aggressive repurchases.
HRB trades at a P/E ratio of just 6.3, well below our target multiple of 10. An expanding P/E ratio could boost future returns by 8.3% annually over the next five years. Add in the dividend yield of 4.5% and 10% expected EPS growth, and we project an annual return of 22% through fiscal 2032.
Recommended Action: Buy HRB.