Foot Locker (NYSE: FL) increases dividend to US $ 0.30
Foot Locker, Inc. (NYSE: FL) will increase its dividend on January 28 to $ 0.30. This brings the dividend yield to 2.4%, which shareholders will be delighted with.
Foot Locker’s dividend is well covered by earnings
Impressive dividend yields are good, but it doesn’t matter much if the payouts can’t be sustained. However, Foot Locker’s profits easily cover the dividend. As a result, much of what she earned was reinvested in the business.
Over the next year, EPS is expected to drop 18.8%. If the dividend continues according to recent trends, we estimate the payout ratio could be 14%, which we consider to be quite comfortable, with most of the company’s profit remaining to grow the business in the future.
Historic NYSE dividend: FL December 28, 2021
The history of the company’s dividends has been marked by instability, with at least one decline in the past 10 years. Since 2011, the first annual payment was US $ 0.66, compared to the most recent annual payment of US $ 1.20. This works out to a compound annual growth rate (CAGR) of around 6.2% per year over that time period. A reasonable rate of dividend growth is good to see, but we are concerned that the dividend history is not as strong as we would like, having been cut at least once.
The dividend seems likely to increase
Since the dividend has been reduced in the past, we need to check if the profits are increasing and if this could lead to higher dividends in the future. It is encouraging to see that Foot Locker has increased its earnings per share by 14% per year over the past five years. EPS growth bodes well for the dividend, as does the low payout ratio the company is currently reporting.
We really like the Foot Locker dividend
In summary, it is always positive to see the dividend increase and we are particularly satisfied with its overall sustainability. Profits easily cover the company’s distributions, and the business generates a lot of cash. If earnings decline over the next 12 months, the dividend could be shaken slightly, but we don’t think that should be too much of a problem in the long run. Considering all of this, this looks like a good dividend opportunity.
Market movements testify to the high value of a coherent dividend policy compared to a more unpredictable one. Still, there are a host of other factors that investors need to consider, aside from dividend payments, when analyzing a business. For example, we have identified 3 warning signs for Foot Locker (1 shouldn’t be ignored!) That you should know before investing. If you are a dividend investor, you can also view our curated list of high performing dividend stocks.
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