Foot Locker, Inc. (NYSE:FL) is a true Dividend Rock Star. Its yield of 3.9% makes it one of the market's top dividend payer. In the past ten years, Foot Locker has also grown its dividend from $0.60 to $1.52. Below, I have outlined more attractive dividend aspects for Foot Locker for income investors who may be interested in new dividend stocks for their portfolio.
What Is A Dividend Rock Star?
It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically:
- Its annual yield is among the top 25% of dividend payers
- It has paid dividend every year without dramatically reducing payout in the past
- Its has increased its dividend per share amount over the past
- It is able to pay the current rate of dividends from its earnings
- It has the ability to keep paying its dividends going forward
High Yield And Dependable
Foot Locker's yield sits at 3.9%, which is high for Specialty Retail stocks. But the real reason Foot Locker stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. In the case of FL it has increased its DPS from $0.60 to $1.52 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Foot Locker has a trailing twelve-month payout ratio of 29%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect FL's payout to remain around the same level at 32% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.3%. In addition to this, EPS should increase to $5.1.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
There aren't many other stocks out there with the same track record as Foot Locker, so I would certainly recommend further examining the stock if its dividend characteristics appeal to you. However, given this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company's fundamentals and underlying business before making an investment decision. Below, I've compiled three pertinent factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for FL’s future growth? Take a look at our free research report of analyst consensus for FL’s outlook.
- Valuation: What is FL 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 FL is currently mispriced by the market.
- Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.