Why Foot Locker Inc (NYSE:FL) Is A Top Dividend Stocks
There is a lot to be liked about Foot Locker Inc (NYSE:FL) as an income stock, over the past 10 years it has returned an average of 3.00% per year. The company is currently worth US$5.65b, and now yields roughly 2.77%. Should it have a place in your portfolio? Let’s take a look at Foot Locker in more detail.
Check out our latest analysis for Foot Locker
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share amount increased over the past?
Is is able to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Foot Locker pass our checks?
The company currently pays out 58.79% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. However, going forward, analysts expect FL’s payout to fall to 30.26% of its earnings, which leads to a dividend yield of around 2.97%. However, EPS should increase to $4.51, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of FL it has increased its DPS from $0.60 to $1.38 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Relative to peers, Foot Locker generates a yield of 2.77%, which is high for Specialty Retail stocks but still below the market’s top dividend payers.
Next Steps:
With these dividend metrics in mind, I definitely rank Foot Locker as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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 essential factors you should further research:
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 better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
