Buckle pays out about 100% of its earnings in dividend. Quite unusual. Which means, to me, if something awful were to happen, like say an unexpected drop in sales, maybe the continuation of the dividend might be in question.
I'm very new to this stock. Can someone tell me what the dividend policy is for this company, and if there's some reason why it should be safe?
Thanks for everyone's input. It was very helpful.
I didn't realize that BKE's annual dividend was only .80. That's only a payout ratio of 30% of their projected earnings for 2010. Sounds safe to me. Also its a healthy return on investment (3.1% of the current stock price).
BKE seems to be a good place to park some money. The balance sheet looks good. The payout looks safe, the stock has a low p/e of less than 10, and the stock price seems to have been beaten down based on factors which are temporary (ie a sales blip), so has potential to go back up. Also, BKE seems to be growing their number of stores.
Good luck investors.
OK...you guys can say all you want about cash-on-hand, expansion, etc. I do like this company a lot, but to make an argument that the "dividend is safe" is just irresponsible. Am I saying it is going to be cut? No. But, the "safe" threshold for payout ratios is about 60% (give or take). A 93-100% payout ratio is NOT safe. Do you really think that just because they have $200 million on hand that they would start wrecklessly blowing through it if the economy experienced the double dip we all fear? Quit cheerleading and get real. A 93% payout is VERY, VERY high and should be monitored closely. Again, I like this company and buy clothes there a lot, but their last SSS numbers sucked (-7%)compared to other retailers. Be smart people. Yes, this appears like a good LONG term entry point, but it could get really dicey if their SSS trends continues. I know their comparables were high, but still. Just sayin.
The regular dividend is .80. The trailing 12 months eps prior to tomorrow's report is $2.79. The coverage ratio is sub-30%.
I am not sure where the initiator of this thread is getting his info. He may be confused with the special dividend they do now and then. They may do one this year to but play it safe.
Also, free cash flow is more germane to divindend safety than gaap earnings, not that in this case it changes the discusssion much.
you're calling the dividend the (Q div + specials) right? regular Q div is about 80/2.79, that would appear pretty safe. specials are specials, as CF permits. I did become cautious here when noted total S was down slight on stores up 1%, but that doesn't mean they are off trend to me. with 10% unemp. consumer is weak, although their demographic might be better. not sure higher teen unemployment has much to do with it, certainly doesn't help.
I'd also say that I'm happy to go without a dividend when a good company feels it can more advantageously use the cash to improve shareholder results in some other way. Since Buckle is a well-managed company, I trust that if they chose to do that, it would be for good reasons.
It looks to me dividend payout ratio was 93 percent of earnings, not 100 percent. Company has $154 million in cash and no debt. Operating margin is 22 percent. Cashflow is strong. Company doesn't need to borrow to grow its store count by 20 per year. There is excess cash. Rather than hold onto excess cash, the company rewards shareholders, including the biggest shareholder, chairman Daniel Hirschfeld, whose father founded the company. To quote Value Line: "we believe management (with a large ownership stake) will likely pay out a special dividend before the tax rate on dividends changes. Note specials were distributed in 2007, 2008 and 2009."