V.F. Corporation, together with its subsidiaries, engages in the design, manufacture, and sourcing of branded apparel and related products for men, women, and children in the United States. This dividend aristocrat has increased distributions for the past 38 consecutive years. The latest dividend increase was in October 2010, when the company raised distributions by 5% to 63 cents/share.
Over the past decade this dividend stock has delivered annualized total returns of 15.80 % to its shareholders.
The company has managed to deliver a 6.90% average annual increase in its EPS between 2000 and 2009. Analysts expect V.F. Corp to earn $6.19 per share in 2010 and $6.67/share in 2011. In comparison, the company earned $4.13/share in 2009.
The company’s return on equity has deteriorated steadily since hitting a hit in 2003. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
The annual dividend payment has increased by an average of 11.50% annually since 2000, which is much higher than the growth in EPS. The main reason is the increase in the dividend payout ratio over the past decade, triggered by a steep one time dividend increase of almost 90% in 2006.
A 12 % growth in dividends translates into the dividend payment doubling every six years. If we look at historical data, going as far back as 1986, V.F. Corp has actually managed to double its dividend payment every seven and a half years on average.
The dividend payout ratio has increased over the past decade, breaking out above 50% in 2009. Given the expected earnings of $6.19 in 2010 and the new annual dividend rate of $2.52/share, I would expect the payout to drop to 50% and to decrease further by 2011. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently, VF. Corp is attractively valued at 13.50 times earnings, has an adequately covered distribution and yields 3%. I would consider initiating a position in the company on dips.
Full Disclosure: None
- Eleven Dividend Machines Beating Inflation
- 33 Dividend Champions to Consider
- 12 Dividend Stocks to own in this market
- Diversifying into small and mid cap dividend stocks
The stock market is finally having the correction everyone has been waiting for since 2012. In the past month, the S&P 500 is down by 7...
The price of oil has declined a lot since the summer of 2014. The West Texas Intermediate (WTI) in Cushing, Oklahoma has declined from a hig...
I am often asked the following question in some variation: If I were starting a dividend portfolio today, and had a lump sum to put to work ...
It is not a secret that stock prices have been rising for 6 - 7 years in a row now. This makes it easy to hold on to stocks, and believe tha...
As someone who has been investing in, and writing about dividend paying companies for over seven years , I have accumulated a lot of observa...
As many of you know, I only invest my money in companies which pay dividends. I have made a lot of money that way , and I use dividends as a...
Note: I originally planned to post this article tomorrow, but in light of recent developments about Baxalta being in the process of being ta...
I have been focusing on dividend growth investing for several years now. As such, I try to think about why it works, and also think about s...
As an investor my goal is to attain financial independence using my dividend growth strategy. As a dividend investor, my goal is to generat...
One of my favorite quotes from Warren Buffett deals with an issue that many dividend investors face from time to time. The quote is” If you...