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Dick’s Sporting Goods Inc (NYSE:DKS): Ex-Dividend Is In 4 Days

Attention dividend hunters! Dick’s Sporting Goods Inc (NYSE:DKS) will be distributing its dividend of US$0.23 per share on the 28 September 2018, and will start trading ex-dividend in 4 days time on the 13 September 2018. Is this future income a persuasive enough catalyst for investors to think about Dick’s Sporting Goods as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.

See our latest analysis for Dick’s Sporting Goods

How I analyze a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

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  • Is their annual yield among the top 25% of dividend payers?

  • Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

  • Has it increased its dividend per share amount over the past?

  • Is its earnings sufficient to payout dividend at the current rate?

  • Will it have the ability to keep paying its dividends going forward?

NYSE:DKS Historical Dividend Yield September 8th 18
NYSE:DKS Historical Dividend Yield September 8th 18

How does Dick’s Sporting Goods fare?

Dick’s Sporting Goods has a trailing twelve-month payout ratio of 24.3%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect DKS’s payout to increase to 28.2% of its earnings, which leads to a dividend yield of 2.4%. However, EPS is forecasted to fall to $3.24 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Dick’s Sporting Goods as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Dick’s Sporting Goods generates a yield of 2.4%, which is high for Specialty Retail stocks but still below the market’s top dividend payers.

Next Steps:

If Dick’s Sporting Goods is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three fundamental aspects you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for DKS’s future growth? Take a look at our free research report of analyst consensus for DKS’s outlook.

  2. Valuation: What is DKS worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether DKS is currently mispriced by the market.

  3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.