Stock soars after strong 4Q16 results
After PVH Corporation (PVH) reported solid 4Q16 results on March 22, beating the consensus for both top line and bottom line, the stock jumped 8.5% and closed at $98.55 on March 23.
The company’s YTD (year-to-date) gains now stand at 9.2%. Its performance is better than those of Ralph Lauren (RL), Hanesbrands (HBI), and Under Armour (UAA), which have lost 12%, 5.8%, and 34%, respectively.
PVH has also outperformed the S&P 500 Apparel and Accessories Index, which has fallen more than 5% YTD. The S&P 500 Apparel and Accessories Index tracks Ralph Lauren, Hanesbrands, VF Corporation (VFC), Coach (COH), PVH, Michael Kors (KORS), and Under Armour (UA). Among these peers, only Coach has done better than PVH, reporting gains of 11%.
PVH Corp’s dividend payout compared to peers
PVH is a consistent dividend payer, but it pays a fixed dividend of $0.0375 per share and has not increased that dividend for 15 years. The company has a dividend payout ratio of 2.2%—the lowest among dividend-offering branded apparel companies. By comparison, Coach and VFC have dividend payout ratios of 74% and 54%, respectively.
PVH Corp stock offers a one-year forward yield of 0.2%. By comparison, dividend yields of Coach and VFC are hovering around 3.6% and 3.2%, respectively.
Stock repurchase program
While PVH’s stock offers a very low dividend yield, the company frequently repurchases its shares to boost investor returns. It recently authorized a $750 million increase to its already existing $500 million share repurchase program, which would be valid until June 2020. During 2016, PVH repurchased 3.2 million shares for $315 million.
Notably, ETF investors seeking to add exposure to PVH can consider the First Trust Consumer Discretionary AlphaDEX (FXD), which invests 1.6% of its portfolio in PVH.