Dick’s Sporting Goods Inc (NYSE:DKS): What You Have To Know Before Buying For The Upcoming Dividend
Shares of Dick’s Sporting Goods Inc (NYSE:DKS) will begin trading ex-dividend in 4 days. To qualify for the dividend check of $0.23 per share, investors must have owned the shares prior to 07 June 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Dick’s Sporting Goods’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for Dick’s Sporting Goods
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is it paying an annual yield above 75% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has the amount of dividend per share grown over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
How well does Dick’s Sporting Goods fit our criteria?
The current trailing twelve-month payout ratio for the stock is 23.66%, which means that the dividend is covered by earnings. Going forward, analysts expect DKS’s payout to increase to 33.23% of its earnings, which leads to a dividend yield of 2.41%. However, EPS is forecasted to fall to $3.09 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. 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 2.35%, which is on the low-side for Specialty Retail stocks.
Next Steps:
If Dick’s Sporting Goods is in your portfolio for cash-generating reasons, there may be better alternatives out there. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three fundamental aspects you should look at:
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.
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.
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 pass 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.
