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Analyzing Dick’s Sporting Goods’ Dividend and Share Repurchase Plan

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Dividend policies

Dick’s Sporting Goods (DKS), despite heavy investments, remains committed to paying dividends to its shareholders. For fiscal 2017, DKS paid a dividend per share of $0.17, averaging $0.68 for the year. This represents an ~12.0% increase over a quarterly dividend per share of about $0.15 in fiscal 2016.

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Dividend yield is low compared with peers

For an investor, dividend yield implies cash flow received for each dollar invested in a company’s stock. Dick’s Sporting Goods’ current dividend yield of 2.2% is based on the closing price of $30.28 as of January 3, 2018, and is comparatively lower than its peers. Foot Locker’s (FL) current dividend yield stands at 2.6% while that of Finish Line (FINL) is 3.2%.

Big 5 Sporting Goods’ (BGFV) current yield based on its January 3, 2018, closing price is an impressive 8.2%. However, Dick’s Sporting Goods’ dividend yield is higher than that of the SPDR S&P 500 ETF (SPY), which offers a dividend yield of 1.8%.

Share buyback plans

Apart from paying dividends, Dick’s Sporting Goods has an extensive share repurchase plan in place. Share repurchases help enhance its earnings per share by lowering the average share count.

On March 16, 2016, the company announced an additional $1 billion buyback plan extending to 2021. In the first three quarters of fiscal 2017, the company repurchased about 6.8 million shares worth $242.1 million. At the end of fiscal 3Q17, shares worth $799.0 million remained under the existing authorization plan.

In the next article, we’ll see where Dick’s Sporting Goods’ valuation stands.

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