Gap is a consistent dividend payer
Gap (GPS) has paid dividends and repurchased its shares regularly, supported primarily by its solid cash balance. The company closed the first quarter of 2017 with $1.6 billion in cash and cash equivalents.
It paid a dividend of $0.23 per share in 1Q17 and announced a second-quarter dividend of the same amount. It repurchased $100.0 million of shares in 1Q17, and based on its current balance sheet strength, it plans to buy back another $100.0 million of shares in the second quarter.
Comparing dividend payouts
Gap offers one of the highest dividend payouts in the apparel sector. Its current dividend payout ratio, which calculates the percentage of earnings used to pay dividends to investors, stands at 53.0%. That compares to 2.2%, 10.5%, and 22.5% for PVH (PVH), Hanesbrands (HBI), and Nike (NKE), respectively.
Comparing dividend yields
The dividend yield offered by Gap stock is among the highest in the sector. The one-year forward dividend yield on the company’s stock stands at 3.8%. That compares to dividend yields of 3.0%, 3.3%, and 0.20%, respectively, on shares of Coach, VF Corp., and PVH.
Investors looking for exposure to Gap through ETFs can choose the First Trust Consumer Discretionary AlphaDEX ETF (FXD), which invests 1.0% of its holdings in the company.