Retailer Offers 3.2% Yield, 11 Years of Dividend Boosts
By: Ned Piplovic,
While the overall brick-and-mortar retail industry going through a difficult period, one specialty retailer has found a way to reward its shareholders with more than a decade of consecutive annual dividend boosts and could also be on the verge of reversing its declining share price trend to complement the steady dividend income with a healthy dose of asset appreciation.
The share price experienced some volatility and fell approximately 40% over the past two years. However, the recent activity of the company’s share price indicates that the share price’s downward trend might be turning around and that the price could continue to rise. Combined with the robust dividend income driven by dividend boosts, a rising share price should improve total return even further than the current level. Total return already improved from negative 19% for the past three years to positive 2% over the past 12 months.
The ex-dividend for WSM is on October 26, 2017, with the pay date following about a month later, on November 22, 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.
The company’s current quarterly dividend of $0.39 is equivalent to a $1.56 annual payout and a 3.2% dividend yield. A decade of dividend boosts drove the current 3.2% dividend yield to a level 37.4% above the company’s five-year average dividend yield of 2.3%. Additionally, Williams-Sonoma’s current dividend fares much better than its sector peers. While the company’s current dividend yield is 62% higher than the 1.95% average yield in the services sector, it is 82.65% above the 1.73% average yield for the companies in the specialty retail segment.
WSM rewarded its shareholders with 11 consecutive years of dividend boosts. Over that period, the company has almost quadrupled its total annual dividend by hiking the annual distribution at an average rate of 13.2% per year.
In the most recent quarterly report, WSM announces that some of the company’s smaller brands did not perform to expectations. However, the significant revenue and earnings increases from the two largest brands – Williams-Sonoma and West Elm – were more than enough to compensate for the lack of performance of the other brands.
The share price went through a significant downturn and fell 40% over the past two years. However, 95% of that drop happened in the second half of 2015. Compared to the January 2016 level, the current share price is only about 3% lower. The share price hit its 52-week low of $42.68 on August 22, 2017, and has been on the rise since then. Since the August low, the share price has appreciated more than 17% and the price has broken above the 200-day moving average (MA) for the first time since early May 2017. Additionally, the 50-day MA has reversed trend as well and has been slowly increasing since mid-September.
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