Carter's Inc's Dividend Analysis
Understanding the Dividend Dynamics of Carter's Inc
Carter's Inc (NYSE:CRI) recently announced a dividend of $0.75 per share, payable on 2023-12-08, with the ex-dividend date set for 2023-11-27. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Carter's Inc's dividend performance and assess its sustainability.
What Does Carter's Inc Do?
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Carter's Inc makes apparel for babies and children under brand names including Carter's and OshKosh B'gosh. It sells its products through a multi-channel business model, which includes retail stores, eCommerce, and wholesale sales channels, as well as retail omnichannel capabilities in the United States and Canada, which enables it to reach a broad range of consumers around the world. The company operates in three segments; U.S. Retail, U.S. Wholesale, and International. The majority of Carter's sales are in the U.S. and through the Carter's brand. The company predominantly sources products through contract manufacturers in Asia. It has multiple distribution centers in the U.S., in addition to distribution centers in Canada and Asia that serve international customers.
A Glimpse at Carter's Inc's Dividend History
Carter's Inc has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Carter's Inc's Dividend Yield and Growth
As of today, Carter's Inc currently has a 12-month trailing dividend yield of 4.43% and a 12-month forward dividend yield of 4.43%. This suggests an expectation of the same dividend payments over the next 12 months. Over the past three years, Carter's Inc's annual dividend growth rate was 14.50%. Extended to a five-year horizon, this rate decreased to 4.60% per year. Based on Carter's Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Carter's Inc stock as of today is approximately 5.55%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Carter's Inc's dividend payout ratio is 0.55. Carter's Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Carter's Inc's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Carter's Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Carter's Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Carter's Inc's revenue has increased by approximately 1.70% per year on average, a rate that underperforms than approximately 57.01% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Carter's Inc's earnings increased by approximately 1.80% per year on average, a rate that underperforms than approximately 62.22% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 1.90%, which underperforms than approximately 65.06% of global competitors.
Next Steps
Investors considering Carter's Inc for its attractive dividend payments should weigh the dividend growth rate, payout ratio, profitability, and growth metrics. While the current yield and history of consistent dividend payments may be appealing, the company's underperformance in revenue and earnings growth relative to competitors could be a concern for long-term sustainability. Prospective and current shareholders must consider whether Carter's Inc can enhance its growth metrics to support ongoing dividend generosity. For those looking to expand their portfolios with similar dividend-paying stocks, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
