Friday, November 11, 2011

Dividend Growth Stocks by Sector - Retail

Dividend growth investing is a strategy where investors purchase stock in quality companies, which have committed themselves to raising dividends for long periods of time. Dividend growers and initiators have been found to outperform the market over the past 40 years according to Ned Davis Research studies. I have previously discussed these studies in this article.


Just because one has a strategy which gives them an edge, or the ability to generate consistent returns, does not mean that all caution should be thrown to the wind. In order to be successful, investors should focus on companies with solid fundamentals, which are attractively priced and have sustainable dividend payments. In addition to that, investors should build diversified dividend portfolios, where companies from different sectors are being included.

Today I am going to discuss the companies in the retail sector. The dividend growth stocks which are representative of the sector include:

Wal-Mart Stores, Inc. (WMT) operates retail stores in various formats worldwide. This dividend champion has raised distributions for 37 years in a row. The ten year annual dividend growth rate is 17.80%. Yield: 2.80% (analsyis)

Target Corporation (TGT) operates general merchandise stores in the United States. This dividend champion has raised distributions for 44 years in a row. The ten year annual dividend growth rate 14.90is %. Yield: 2.40% (analsyis)

Lowe's Companies, Inc. (LOW), together with its subsidiaries, operates as a home improvement retailer in the United States, Canada, and Mexico. This dividend champion has raised distributions for 49 years in a row. The ten year annual dividend growth rate is 17.60%. Yield: 2.80% (analsyis)

Walgreen Co. (WAG), together with its subsidiaries, engages in the operation of a chain of drugstores in the United States. This dividend champion has raised distributions for 36 years in a row. The ten year annual dividend growth rate is 16.50%. Yield: 2.50% (analsyis)

Family Dollar Stores, Inc. (FDO) operates a chain of self-service retail discount stores primarily for low and middle income consumers in the United States. This dividend champion has raised distributions for 34 years in a row. The ten year annual dividend growth rate is 10.10%. Yield: 1.40% (analsyis)

Technically however, using Standard & Poor's classifications, Wal-Mart, Walgreen's are Consumer Staples, while Lowe's, Family Dollar and Target are examples of Consumer Discretionary stocks. The companies that are attractively priced today include Lowe's (LOW), Walgreen (WAG) and Wal-Mart Stores (WMT). Target (TGT) and Family Dollar (FDO) could be decent additions on dips below $48 and $36 respectively.

Full Disclosure: Long WMT, LOW, WAG, FDO

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1 comment:

  1. Hello,
    How do you go about the comparison with a company like Lowes, when they seem to be losing to Home Depot. Recently Lowes closed a 4 year old store in Ellsworth Maine. The closure was directly related to the opening of a Home Depot 1/4 mile away.
    So I guess what I'm saying is that while Lowes might look good in the just in the light of dividends, when the competition is brought in to the picture I for one think Lowes may go the way of Hechinger.
    Thanks in advance for your thoughts.
    Ed
    In Knox Maine

    ReplyDelete

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