Foot Locker Hikes Quarterly Dividend 11% (FL)
By: Ned Piplovic,
Foot Locker (NYSE: FL) has increased its annual dividend payout amount for the eighth consecutive year. The upcoming quarterly dividend payment in April amounts to an 11.3% increase over the prior quarter and a forward yield for 2018 of 3.0%.
While Foot Locker is about 40% lower than it was one year ago, the share price has been trending higher over the past six months. While there is speculation as to whether FL’s uptrend will continue, the low dividend payout ratio of 31% provides a measure of confidence that the company should be able to continue raising its annual dividends and keep pace with any rising share price trend.
Investors who believe that Foot Locker will continue to climb higher should conduct their research and be on the investor records prior to the company’s next ex-dividend date on April 19, 2018. The dividend pay date will be on May 4, 2018.
Foot Locker, Inc. (NYSE:FL)
Founded in 1879 and headquartered in New York, Foot Locker, Inc. operates as an athletic shoes and apparel retailer. The company operates in two segments: Athletic Stores and Direct-to-Customers. The Athletic Stores segment retails athletic footwear, apparel, accessories and equipment through various store formats, including Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction and Runners Point. As of November 2017, the company operated 3,363 stores in 23 countries, including North America, Europe, Australia and New Zealand. The Direct-to-Customers segment sells athletic footwear, apparel, equipment and team-licensed merchandise for high school and other athletes through catalogs and more than a dozen brand websites.
In May 2017, Foot Locker was trading close to $80 a share, only to fall by more than 60% to a one-year low of $28.42 in mid-November 2017. However, since then, the share price has recovered a third of that loss to trade around $45 per share currently. In terms of recovery from the November lows, Foot Locker is up about 60% in just five months.
Because of the declining share price throughout much of last year, the 50-day moving average (MA) dropped below the 200-day MA in early June 2017 and remained below it for the next eight months. However, the 50-day MA crossed back above its counterpart at the beginning of February 2018 and is still higher as of March 28. The market pullback in February and March has dropped the company’s share price below the 50-day MA, but it remains slightly above the 200-day MA.
March was a positive month for Foot Locker that saw shares slowly rising in price again to the point that FL stands around 3% below its 50-day MA. If the share price can cross back above the 50-day MA in the course of the next week or two, the current uptrend could very well continue. This would put Foot Locker in an advantageous position to continue the recovery of its 2017 losses.
In terms of its annual dividend payout, Foot Locker boosted its quarterly distribution by double-digit percentages from the prior amount of $0.31 per share to the current $0.345 quarterly amount. This is equivalent to a $1.38 annualized payout and a 3% forward yield, which is nearly 90% above Foot Locker’s own 1.6% average yield over the past five years.
In addition to exceeding its own average yield over the last five years, Foot Locker’s current 3% yield exceeds the 2.1% average yield of the entire Services sector by more than 40% and is 22% higher than the 2.46% average yield of all the companies in the Apparel market segment.
Over the past 15 years, Foot Locker has missed only annual dividend hike, which was in 2010. Even with that one missed boost, the total annual dividend amount rose at an average rate of 17.7% per year and is currently more than 11 times higher than it was in 2003. Since resuming dividend hikes in 2011, Foot Locker boosted its annual dividend amount at an average growth rate of 11% per year over the past eight consecutive years.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.