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If you are an income investor, then Abercrombie & Fitch Co. (NYSE:ANF) should be on your radar. Abercrombie & Fitch Co., through its subsidiaries, operates as a specialty retailer. Over the past 10 years, the US$1.1b market cap company has been growing its dividend payments, from $0.70 to $0.80. Currently yielding 5.1%, let's take a closer look at Abercrombie & Fitch's dividend profile.
What Is A Dividend Rock Star?
It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:
- It is paying an annual yield above 75% of dividend payers
- It has paid dividend every year without dramatically reducing payout in the past
- Its dividend per share amount has increased over the past
- It can afford to pay the current rate of dividends from its earnings
- It is able to continue to payout at the current rate in the future
High Yield And Dependable
Abercrombie & Fitch currently yields 5.1%, which is high for Specialty Retail stocks. But the real reason Abercrombie & Fitch stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you're investor who wants a robust cash inflow from your portfolio over a long period of time.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you're eyeing out is reliable in its payments. ANF has increased its DPS from $0.70 to $0.80 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.
Abercrombie & Fitch has a trailing twelve-month payout ratio of 55%, which means that the dividend is covered by earnings. Going forward, analysts expect ANF's payout to remain around the same level at 56% of its earnings. Assuming a constant share price, this equates to a dividend yield of 5.1%. Furthermore, EPS is forecasted to fall to $1.02 in the upcoming year.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
Investors of Abercrombie & Fitch can continue to expect strong dividends from the stock. With its favorable dividend characteristics, if high income generation is still the goal for your portfolio, then Abercrombie & Fitch is one worth keeping around. However, given 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. Below, I've compiled three fundamental aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for ANF’s future growth? Take a look at our free research report of analyst consensus for ANF’s outlook.
- Valuation: What is ANF 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 ANF 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.