Stock market performance
Dollar General’s (DG) stock has failed to reward investors this year. The discount retailer is down 5.2% YTD (year-to-date). It’s currently trading at $70.21, 38% below its 52-week high price. In comparison, competitor Dollar Tree (DLTR) has performed better, rising 1.2% YTD.
Supermarket peers have delivered mixed performances. The share prices of Kroger (KR) and Supervalu (SVU) are down 15.6% and 16.3%, respectively. However, Whole Foods Market (WFM) and Sprouts Farmers Market (SFM) have risen 15% and 24.3%, respectively, to date.
Dividends and share repurchases
Dollar General boosts shareholders returns by paying quarterly dividends and repurchasing shares. The company has paid regular dividends after reinstating its dividend program in fiscal 2015.
In fiscal 2016, DG returned $1.3 billion to investors through dividends and buybacks. Over the last five years, it has repurchased 74.4 million shares for $4.6 billion. In fiscal 2017, the retailer plans to repurchase around $450 million shares.
The company has a shareholder returns target of 11% to 17%. Its 2016 shareholder returns stood at 14.5%, including 13.1% in EPS growth and 1.4% in dividend yield.
Comparing dividend yields
Dollar General has a dividend payout of 22%, which means that the company’s dividends consume 22% of its earnings. In comparison, Target (TGT) and Walmart have dividend payouts of 50% and 34%, respectively.
Investors looking for exposure to Dollar General through ETFs can consider the VanEck Retail RTF (RTH), which invests 2.7% of its total holdings in the company.