2 Upscale Retailers Offer 10+ Years of Rising Dividend at Double Digit Annual Growth Rates
By: Ned Piplovic,
While retail might look like a terrible sector for investing right now, two specialty retailers might be worth considering for rising dividend income that grew at double-digit rates for more than a decade.
One of the stocks performed very well over the past year and returned a 50% share price increase. While the other company’s share price lost a little value since last year, most recent quarterly report showed promising results.
One of the equities is expected to declare its quarterly dividend details in the next couple of weeks and the ex-dividend date for the other company is June 16, 2017.
Williams-Sonoma, Inc. (NYSE:WSM)
Williams-Sonoma, Inc. operates as a multi-channel specialty retailer of various products for home. The company offers cooking tools, dining implements, entertaining products and a library of cookbooks under the Williams-Sonoma brand, as well as home furnishings and decorative accessories under the Williams-Sonoma Home brand. Additionally, the company sells furniture, bedding, rugs, curtains, lighting, tabletop and decorative accessories under the Pottery Barn, Pottery Barn Kids, PBteen and West Elm brands. Founded in 1956 and headquartered in San Francisco, Williams-Sonoma, Inc. operates approximately 630 stores in 43 U.S. states, Canada, Australia and the United Kingdom. Additionally, the company operates 66 franchised stores and e-commerce websites in the Philippines, Mexico and the Middle East.
While the WSM has yet to announce its dividend distribution for third-quarter 2017, the company hiked its quarterly dividend 5.4% from $0.37 to $0.39 in the previous quarter. Based on historical information, the second quarter’s dividend boost should be the only increase for the year. Therefore, the upcoming dividend payout for the third quarter should be $0.39 per share, which is equivalent to a $1.56 annual dividend and a 3.4% yield. The dividend declaration should happen within the next 10-14 days with mid-July ex-dividend dates and late August pay dates.
The annual dividend rose at an average annual rate of 13.2% every year for the past 11 years. Over that period, the annual dividend payout rose almost 300% from $0.40 in 2006 to the current $1.56.
The share price experienced some volatility over the past 12 months. After going through several up-and-down cycles in the last year, the current share price is 10% below June 2016 levels and just a fraction higher than the 52-week low it reached on June 7, 2017.
However, the most recent quarterly report showed some positives signs. The company beat its guidance numbers for total revenue and earnings per share. Significant revenue and earnings increases from the two largest brands – Williams-Sonoma and West Elm – were more than enough to compensate for lackluster performance of the company’s smaller brands.
Tiffany & Co. (TIF)
Tiffany & Co., designs, manufactures and retails jewelry products and accessories. In addition to its traditional offering of fine jewelry, the company also sells timepieces, leather goods, sterling silverware, china, crystal, stationery, fragrances and wholesale diamonds to third parties. The company offers its products through retail, internet, catalog and business-to-business sales. As of January 31, 2017, the company operated more than 300 stores in 30 countries. Tiffany & Co. is headquartered in New York City where it was founded in 1837.
The quarterly dividend rose 11.1% this quarter from $0.45 to $0.50, which converts to a $2.00 annualized dividend payout and a 2.2% yield. This current dividend boost is a 15th consecutive annual dividend hike. Since 2002, the total annual dividend amount rose more than 12-fold from $0.16 to the current $2.00 annual distribution.
The share price dropped 40% between the stock’s all-time high in November 2014 and June 2016, but performed extremely well over the past year to complement the steady dividend income. After the drop from the 2014 all-time high, the price reversed course last June and rose 50.7% over the past 12 months to close at $93.66 on June 8, 2017. The current share price is just 10% shy of the 2014 all-time high. Several moving average indicators signal that the share price should continue to rise. If the rate of growth continues at the current pace, the share price could crack the $100 barrier and be back in all-time high territory by the end of summer.
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