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Retailers are back to giving away big money to investors

Brian Sozzi
·Editor-at-Large
·3 min read

Enhancing their stock prices via fat dividend payouts and headline grabbing stock buyback announcements hasn’t exactly been top of mind for major retailers in 2020.

Retailers have spent the majority of the year spending their precious funds on outfitting workers with protective gear amidst the pandemic, retrofitting stores to ensure high safety standards and shelling out bonuses to tired employees. But with their cash levels elevated after months of selling essentials to hoarding consumers and carefully managing expenses, some retailers are back to thinking of ways to boost their stock prices even amid ongoing COVID-19 business risks.

In this case, that means the return of stock buybacks and dividend payments.

For instance, the world’s largest retailer Walmart said Tuesday it has repurchased $500 million of its stock in the third quarter. The discounter didn’t repurchase any of its stock in the second quarter, which reflected the high water mark in COVID-19 uncertainty.

Over at struggling mid-tier department store Kohl’s, it’s surprisingly pondering the return of a dividend that it suspended back in April.

“Based on the progress we are making and through disciplined capital management, we are pleased to share that we plan to reinstate a dividend during the first half of 2021,” Kohl’s CEO Michelle Gass told analysts on an earnings call Tuesday. “We’ll be thoughtful on how we reinstate a dividend, taking into account the payout ratio and yield as well as our intent to sustain and grow it over time.”

Here are several big name retailers that clearly have shareholder value creation on their minds before 2021.

Costco

On Monday, the retailer announced a $10 a share special dividend payable to shareholders of record as of December 2. It will be paid out on December 11. The payment will cost Costco $4.4 billion.

Costco had an outsized $12 billion-plus in cash on its balance sheet and five months in a row of double-digit percentage sales gains. So now was a good as time as any to reward shareholders.

One of those shareholders, however, will not be billionaire Warren Buffett.

Target

After another blowout quarter announced Wednesday, discounter Target is back in the game on stock repurchases in a bid to pump up its already surging stock price.

The company said it has lifted its suspension on stock repurchases and will begin buying back its stock in 2021. Target originally suspended its stock buybacks on March 25. The company has $4.5 billion left under a prior stock buyback authorization.

TJX Companies

Although the owner of TJ Maxx, HomeGoods and Marshall’s still has 470 of its 4,570 stores closed due to COVID-19 restrictions — and spotty sales in the third quarter — it plans to reinstate its dividend payment.

The company said Wednesday it would declare a 26 cents a share dividend in December and make it payable in March 2021. This marks a 13% increase in the dividend from the company’s last dividend payment in March.

Lowe’s

The home improvement retailer saw third quarter same-store sales surge 30.4% as quarantined homeowners remodeled their dwellings. That momentum has not been lost on Lowe’s executives, which is also back in the share repurchase game.

Lowe’s said Wednesday it repurchased $621 million in stock in the third quarter after not purchasing any in the second quarter. The company expects to buy back $3 billion of its stock in the fourth quarter.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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