Dividend up 32%
On February 15, 2018, Dick’s Sporting Goods (DKS) increased its quarterly dividend by 32% to $0.23 per share, payable on March 30, 2018, to shareholders as of March 9, 2018. The company’s annualized dividend now stands at $0.90 compared with $0.68 in fiscal 2017. Dick’s Sporting Goods remains committed to maximizing shareholder wealth despite heavy investments.
In addition to paying dividends, the company also has an extensive share buyback plan in place. Share repurchases enhance the earnings per share by reducing the average share count. On March 16, 2016, the company announced an additional $1 billion share repurchase authorization through 2021.
The company repurchased about 6.8 million shares worth $242.1 million for the first three quarters of fiscal 2017. At the end of fiscal 3Q17, shares worth $799 million were left under the existing authorization. In total, Dick’s returned $297.5 million (repurchases and dividends) to shareholders in the first three quarters of fiscal 2017.
Dividend yield is low compared with peers
Dividend yield refers to the cash flow an investor gets for each dollar invested in the company’s stock. Dick’s current dividend yield of 2.7% based on its closing price of $33.57 as of February 15, 2018, is lower than some of its peers. Finish Line’s (FINL) current dividend yield stands at 4.5%, while that of Big 5 Sporting Good’s (BGFV) is an impressive 10.1%. However, Foot Locker’s (FL) current dividend yield based on its February 15, 2018, closing price is 2.5%.
What about valuation
As of February 15, 2018, Dick’s was trading at a 12-month forward PE (price-to-earnings) ratio of 12.2x. In comparison, Finish Line, Foot Locker, and Big 5 Sporting Goods were trading at forward PEs of 13.4x, 11.1x, and 10.8x, respectively.