V.F. Corporation (VFC) designs and manufactures, or sources from independent contractors various apparel and footwear products primarily in the United States and Europe. This dividend champion has paid dividends since 1941, and has been able to boost them for 40 years in a row.
The company’s last dividend increase was in October 2012 when the Board of Directors approved a 20.80% increase to 87 cents/share. The company’s peer group includes Coach (COH), Ralph Lauren (RL) and PVH Corp (PVH).
Over the past decade this dividend growth stock has delivered an annualized total return of 18.70% to its shareholders.
The company has managed to deliver an 10.50% average increase in annual EPS since 2002. Analysts expect VF Corp to earn $9.54 per share in 2012 and $10.99 per share in 2013. In comparison, the company earned $7.98/share in 2011.
outlined in its strategy the goal to generate $5 billion in additional sales and $5 in additional earnings per share by 2015, from 2010 levels. Over the near term, profits are going to come from increase I profit margins as denim costs decrease. Another growth factor could be expansion into international markets, as well as strategic shifting of focus to more profitable brands. The company expects to grow international sales by 15%/year, until they reach 40% of total sales. The company has a history of making acquisitions work, as evidenced by Vans and North Face deals in the early 2000s. The deal for Timberland brand is expected to be accretive to earnings as well. The company delivers a quality product at an attractive price point for consumers.
Another factor that could contribute to revenue growth is increase in the direct to consumer channels of sales. This will be achieved by increasing number of retail stores in US and Internationally as well as through online sales.
The return on equity has decreased from 22% in 2002 to 12.50% by 2009. Since then, it has increased back up to 21.20% in 2011. I generally want to see at least a stable return on equity over time.
The annual dividend payment has increased by 10.90% per year over the past decade, which is lower than the growth in EPS.
An 11% growth in distributions translates into the dividend payment doubling every six and a half years on average. If we look at historical data, going as far back as 1988, one would notice that the company has actually managed to double distributions every eight years on average.
The dividend payout ratio has increased from 30% in 2002 to 57% in 2009, before decreasing to 33% 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 16.50 times earnings and has a sustainable distribution. However, given the low yield of 2.30%, I would consider initiating a position in the stock on dips below $140.
Full Disclosure: None
- Why I am not worried about the Fiscal Cliff and Dividend Tax Increases
- A Record Week for Dividend Increases
- How long does it take to manage a dividend portfolio?
- Dividend Aristocrats List for 2012
Index investing has become extremely popular in recent years. A lot of new investors have embraced the strategy in recent years. Unfortunate...
On April 3rd, 2017, Buffett’s Berkshire Hathaway (BRK.B) will receive $148 million dollars in dividend income from their 400 million shares ...
As part of my monitoring process, I evaluate the list of dividend increases every week. This exercise helps me observe the rate of dividend ...
As you know, I review the list of dividend increases every single week as part of my monitoring process. I usually focus my attention on the...
Every week, I go through the list of dividend increases as part of my monitoring process. I usually focus on those companies that have raise...
John Bogle is an investing legend. He is the founder of Vanguard Group, a $4 trillion dollar mutual fund powerhouse. Vanguard is credited fo...
Colgate-Palmolive Company, together with its subsidiaries, manufactures and markets consumer products worldwide. The company operates in two...
I have owned shares of the largest Canadian Banks as a long-term investment for over four years now. I initiated a position in those five b...
One of the best vehicles for accumulating a nest egg for ordinary investors is the 401 (k). For most employees of large companies, they get...
This guest post has been wrote by Mike McNeil, passionate investor, founder of Dividend Stocks Rock and author of The Dividend Guy Blog ....