2 Top Dividend-Paying Clothing Companies to Invest In
By: Jonathan Wolfgram,
The two top dividend-paying clothing companies to invest in include a casual fashion brand and a premium footwear manufacturer.
The apparel industry was brutally damaged by the COVID-19 pandemic — U.S. Census Bureau data lists it as one of the most negatively affected industries, with both the closure of malls that housed retail clothing stores and a general resistance from consumers to migrate to online clothes-shopping.
That said, the industry is recovering. The average company in the apparel retail industry has seen its stock grow 8.4% YTD (year to date) and 46.7% in the trailing one-year period. While these numbers seem fine, clothing is considered a basic staple and generally has very few high-growth companies. However, there are some that stand out both as strong dividend-payers and excellent companies for aggressive growth and long-term profits.
2 Top Dividend-Paying Clothing Companies to Invest In, According to DividendInvestor.com
These stocks were found and analyzed through our very own Dividend Screener on the Dividend Investor website. The Dividend Screener is a simple web-based tool that allows investors to sift through thousands of potential equities by adding their own customized criteria to find stocks that fit their portfolio’s unique needs.
Also used in the analysis of the two top dividend-paying clothing companies to invest in was the platform designed by our partners at Stock Rover, offering a rigorous screening program to assess performance metrics for investors. To sign up for a free two-week trial, click here.
Here are the two top dividend-paying clothing companies to invest in.
2 Top Dividend-Paying Clothing Companies to Invest In: Rocky Brands Inc (NASDAQ:RCKY)
Rocky Brands Inc (NASDAQ:RCKY) is a premium footwear and apparel company headquartered in Nelsonville, Ohio, operating in a variety of business segments. The business is split into three primary categories: Wholesale, Retail and Military. Beneath these categories are a variety of individual name brands such as Rocky, Durango, Georgia Boot, Creative Recreation, Lehigh and Michelin footwear.
Where its wholesale and retail brands distribute footwear and apparel through several distribution channels — including over 10,000 stores across the United States and Canada and an international presence through its e-commerce division — Rocky Brands also sells directly to the U.S. military.
Rocky Brands has weathered the Coronavirus storm well. Although the company lost nearly 60% market value at the peak of the pandemic, its stock price has recovered and more than doubled from its pre-crisis price. RCKY has exhibited one-year returns of 176.5%, compared to the industry average of a 64% increase and a 41.4% increase in the S&P 500. RCKY is plotted alongside these two benchmarks in the chart below.
Chart provided by Stock Rover.
Rocky Brands has a stable quarterly dividend payment of $0.14, which has remained level since early 2019. The company pays an annual dividend of $0.56, which corresponds to a forward-yield of 1.0%. Its dividend is increasing steadily and has a five-year average annual growth rate of 4.9%.
The most attractive aspects of the stock are not its dividend payments, however — Rocky Brands’ growth prospects make it look like a buy. Sales have grown 18.9% in the last year and analysts project them to rise an additional 9.8% in the coming year. Additionally in the trailing 12-month period, we have seen earnings per share (EPS) increase 63.1% and earnings before income, taxes, depreciation and amortization (EBITDA) grow 54.6%. Similarly, EPS is projected to grow 9.3% in the coming year and EBITDA to rise 2.6%, continuing the company’s upward sales growth across all metrics.
These positive growth projections make Rocky Brands the fastest-growing company in its industry group, ranking 1st of 40 companies. This position is illustrated by the chart below, where RCKY is in the 97th percentile for EPS in its industry, etc.
A discounted cash flow (DCF) analysis using Stock Rover values the company stock at $60.65, approximately 8% higher than its latest closing price of $55.92.
2 Top Dividend-Paying Clothing Companies to Invest In: Buckle Inc (NYSE:BKE)
Buckle Inc. (NYSE:BKE), of Kearney, Nebraska, is a retailer for casual apparel, footwear and accessories targeting young men and women. Its product mix is aimed at a mid-range price-point and generally caters to fashion-conscious consumers.
The company has an impressive one-year return of 251.1%. Similarly to the above stock, BKE has been charted below for the trailing 12-month period alongside the industry norm and S&P 500 for the same period.
Buckle Inc. has a frequently-varying quarterly dividend payment of $0.33, which will next pay on July 29, 2021. This corresponds to a forward-yield of 2.6% but is potentially higher due to the company’s propensity to pay special dividends once per year. Its dividend is increasing steadily, having grown 10% from its late 2020 distribution of $0.30 to its current $0.33 quarterly value.
The most recent special dividend was $2.00 per share paid in December 2020, and it is difficult to know what the end-of-year special dividend payout will be post-2021.
Buckle is an enticing value stock, with strong financial performance and healthy growth prospects across the board. It has a P/E ratio of 12.4 and P/FCF (price over free cash flow) of 7.3, in addition to a low price over book value of 5.6. All of these indicate the future income and asset value wrapped into BKE stock is highly favorable and make the equity a definite buy for value investors.
Also favorable are the efficiency metrics of BKE when compared to the rest of the retail industry. Its return on assets is high, sitting at an impressive 21.7% (compared to RCKY’s 5.4%).
A discounted cash flow (DCF) analysis using Stock Rover values the company’s stock at $49.88, approximately 1% lower than its latest closing price of $50.14. While the company is unlikely to experience rapid growth to the same degree as Rocky Brands, Buckle is a long-term hold with the potential to offer significant value to its shareholders.
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Jonathan Wolfgram is an editorial staffer who writes website content at Eagle Financial Publications. He graduated from the University of Minnesota with Bachelor’s degrees in Finance and Philosophy. Jonathan writes for www.DividendInvestor.com and www.StockInvestor.com.