Casey’s stock market performance this year
An unimpressive financial performance had a negative impact on Casey’s General Stores (CASY) during 2017. The company was sitting at YTD (year-to-date) losses of 4% in the first ten months of the year. However, Casey’s rose 5.4% in November and 3% during the first five days of December. While there wasn’t any positive news for Casey’s, the ongoing strength in food retail stocks probably drove Casey’s stock price higher.
Kroger (KR) rose 25% in November and ~2% in December after falling 40% until October. A better-than-expected start to the holiday season, strong earnings results, and expected tax cuts were some of the key reasons for the retail rally.
New tax bill
President Trump’s proposed tax reforms are expected to lower the top corporate tax rate from 35% to 22%. Sectors that are domestically oriented and derive most of their income in the US pay the highest tax rates. They will likely benefit the most from the new tax bill. According to Credit Suisse, the retail sector pays an effective tax rate of 35%. Casey’s average effective tax rate for the last five years is also ~35%. A change in the tax regime will certainly benefit Casey’s.
Casey’s has paid regular dividends since 1991. The company increased its dividend per share at an average of 10% over the last five years. It spent $0.96 on dividends in fiscal 2017, which was an increase of 9.1% over the last year. For fiscal 2018, the annualized dividends are $1.02, which is 6.3% more than the previous year.
Casey’s has a dividend payout ratio of 6%, which means it distributes just 6% of its earnings to investors as dividends. It’s lower compared to dividend-paying retailers Walmart (WMT) and Target (TGT). They have dividend payout ratios of 54% and 51%, respectively.
Casey’s stock offers a one-year forward dividend yield of 0.8%. It’s lower than Walmart (2.2%) and Target (4.2%).