Ralph Lauren Boosts Quarterly Dividend 25% (RL)
By: Ned Piplovic,
Featured Image Source: Author: Hwaufraliumea via WikiMedia Commons
After skipping a dividend hike in 2017 for the first time in nearly a decade, the Ralph Lauren Corporation (NYSE:RL) boosted its quarterly dividend payout 25% for its upcoming Quarterly dividend distribution.
The company’s current 1.8% dividend yield is close to the company’s own average yield over the past five years, as well as in line with the average yield of the overall Consumer Goods sector and the Textile — Apparel Clothing industry segment. While the company’s share price fell almost two-thirds from its all-time high in 2015 by mid-2017, the price doubled over the past year and recovered 60% of those losses.
The company’s total sales declined 10% in fiscal 2017. However, improved profitability and earnings figures drove the share price growth. The Ralph Lauren Corporation continued to reduce its capacity and trim the number of stores in 2018 with the intent to reduce its costs and increase earnings by further advancing its profit margins. The company forecasted another 7% decline of total sales for 2018 and a 1% decline for 2019 before reverting to anticipated sales growth in 2020.
Wall Street analysts appear to agree with the company’s projections. Over the past 30 days the earnings estimates for the current quarter rose more than 13% from $1.25 to $1.42 per share. The estimates for the entire year also rose from $6.12 to $6.25 per share, which is an enhancement of nearly 5%.
Investors who agree with the analysts’ projections should consider acting before the company’s next ex-dividend date on June 28, 2018. Taking a position in the company’s stock prior to the ex-dividend date will ensure eligibility for the next round of quarterly dividend distributions on the July 13, 2018, pay date.
Ralph Lauren Corporation (NYSE:RL)
Headquartered in New York, New York, and founded in 1967, the Ralph Lauren Corporation designs, markets, manufactures and distributes apparel and lifestyle products through three business segments — Wholesale, Retail and Licensing. In addition to apparel, which includes a range of men’s, women’s and children’s clothing, the company also offers accessories, home products and fragrances. The company sells its apparel, accessories and fragrances under numerous brand names. The Ralph Lauren Corporation sells its products through 450 of its own stores and more than 600 concession-based shop-within-shops. Additionally, the company sells its products through more than 130 concession shops and more than 130 Club Monaco stores as well as many licensing agreement channels.
The company paid a flat $0.20 dividend for the first seven years after initiating dividend payouts in 2003 and started boosting its annual dividend amount in 2010. By 2016, the company enhanced its annual dividend amount 10-fold to $2.00, which is the same amount that the company paid in 2017. For 2018, the company hiked its quarterly dividend 25% from the $0.50 distribution amount in the previous period to the current $0.625 quarterly dividend payout. This new quarterly dividend amount corresponds to a $2.50 annualized payment and a 1.8% forward yield. Even with the missed dividend boost in 2017, the company advanced its total annual dividend amount more than 12-fold since 2009, which corresponds to a 32.4% average annual growth rate.
The company’s yield has been greatly suppressed by the share price growth from 2.8% one year ago to the current 1.8% yield. Additionally, the yield was 2.4% a little more than a month ago, before the share price spiked in late May 2018. While the company’s current yield is in line with industry averages, the yield from just a month earlier would have exceeded by approximately 30% the 1.78% and 1.83% average yields of the overall Consumer Goods sector and the Textile — Apparel Clothing segment, respectively.
The company’s share price reached its 52-week low of $70.53 on July 6, 2017. After bottoming out in the third week of the trailing 12-month period, the share price more than doubled before reaching its 52-week high of $142.90 on June 12, 2018. After the June peak, the share price pulled back 2.4% and closed on June 19, 2018, at $139.41. While still 20% lower than it was five years ago, this closing price is more than 97% above the share price from one year ago and the 52-low from July 2017.
This share price growth and the small but steady dividend income growth managed to turn a 13.4% total loss over the past five years into an 8.8% total return for the most recent three-year period and a 99% total return over the past 12 months.
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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.