U.S. Markets closed
  • S&P 500

    4,119.21
    +42.61 (+1.05%)
     
  • Dow 30

    34,092.96
    +6.92 (+0.02%)
     
  • Nasdaq

    11,816.32
    +231.77 (+2.00%)
     
  • Russell 2000

    1,960.81
    +28.87 (+1.49%)
     
  • Crude Oil

    76.91
    +0.50 (+0.65%)
     
  • Gold

    1,968.70
    +25.90 (+1.33%)
     
  • Silver

    24.13
    +0.52 (+2.21%)
     
  • EUR/USD

    1.1017
    +0.0151 (+1.39%)
     
  • 10-Yr Bond

    3.3970
    -0.1320 (-3.74%)
     
  • GBP/USD

    1.2386
    +0.0069 (+0.56%)
     
  • USD/JPY

    128.5990
    -1.4690 (-1.13%)
     
  • BTC-USD

    23,752.73
    +627.15 (+2.71%)
     
  • CMC Crypto 200

    538.70
    +296.03 (+121.98%)
     
  • FTSE 100

    7,761.11
    -10.59 (-0.14%)
     
  • Nikkei 225

    27,346.88
    +19.77 (+0.07%)
     

Guess' (NYSE:GES) Has Affirmed Its Dividend Of $0.225

The board of Guess', Inc. (NYSE:GES) has announced that it will pay a dividend of $0.225 per share on the 23rd of December. This makes the dividend yield 4.5%, which will augment investor returns quite nicely.

View our latest analysis for Guess'

Guess''s Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Guess''s dividend was only 44% of earnings, however it was paying out 475% of free cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

Looking forward, earnings per share could rise by 49.3% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 24% by next year, which is in a pretty sustainable range.

historic-dividend
historic-dividend

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was $0.80 in 2012, and the most recent fiscal year payment was $0.90. This works out to be a compound annual growth rate (CAGR) of approximately 1.2% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Guess' has grown earnings per share at 49% per year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Guess' could prove to be a strong dividend payer.

Our Thoughts On Guess''s Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While Guess' is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 4 warning signs for Guess' that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here