TJX Companies Boosts Quarterly Dividend Payout 25% (TJX)
By: Ned Piplovic,
TJX Companies, Inc. (NYSE:TJX) in April 2018 declared a 24.8% quarterly dividend hike, which is the company’s 22nd year of consecutive dividend yield s.
While most dividend income investors might overlook the company’s current 1.9% yield as unworthy of consideration, the company is positioned well within its market segment to continue its dividend, yield and share price growth. In addition to more than two decades of rising annual dividends and an increasing yield, the company’s share price has maintained a steady uptrend for nearly a decade and experienced only two significant pullbacks of 15% or more since January 2009.
TJX’s low dividend payout ratio indicates that the company should be able to cover continued annual dividend hikes and the expanding revenue should support the share-price growth for balanced total returns on shareholders’ investments. Additionally, TJX has an opportunity to take a large slice of the market after one of its competitors – Bon-Ton Stores – filed for liquidation proceedings.
Some investors might hold off on considering the TJX stock for their portfolio until the company’s dividend is well above the 2% mark. However, the current market conditions might allow the company to add a significant market share, expand revenue at a faster pace and reward its shareholders with elevated total returns. In that case, adding TJX shares to a portfolio now could be advantageous for investors confident in TJX’s near-term outlook.
The company’s next ex-dividend date is on May 16, 2018, and the pay date will follow just a little more than three weeks later on June 7, 2018
TJX Companies, Inc. (NYSE:TJX)
Headquartered in Framingham, Massachusetts and founded in 1956, the TJX Companies, Inc. operates as an off-price apparel and home fashions retailer through four business segments – Marmaxx, HomeGoods, TJX Canada and TJX International. The company sells apparel, home fashions, cookware, pet products, jewelry and other merchandise. In addition to its stores under the T.J. Maxx, Marshalls, HomeGoods, Winners, HomeSense, T.K. Maxx, and Sierra Trading Post names, the company sells its merchandise through three websites – tjmaxx.com, tkmaxx.com and sierratradingpost.com. As of February 3, 2018, the company operated a total of 4,070 stores in the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands and Australia.
With its next dividend distribution payout, TJX will boost its quarterly dividend 24.8% from the $0.3125 amount in the previous quarter to the current $0.39 payout. This new quarterly amount corresponds to a $1.56 annualized dividend distribution for calendar 2018 and a 1.9% forward yield. While the current yield might seem low compared to other sectors with traditionally higher yields, TJX’s current 1.9% yield is 57% higher than the company’s own 1.2% average yield over the past five years, just slightly below the 2.06% average yield of the entire Services sector and 31% above the average yield of all the companies in the department stores market segment.
Over the past two decades, the company enhanced its total annual dividend amount five-fold by maintaining an average dividend growth rate of 8.2% per year. However, the more recent growth rates are significantly higher, with the average growth rate over the past three and five years exceeding 20% per year.
In addition to the strong dividend growth, the company also offered its shareholders robust asset appreciation. After trading relatively flat in the first half of calendar 2017, the share price declined 15.3% from the beginning of the trailing 12-month period and fell to its 52-week low of $66.90 on July 24, 2017. After reversing direction in late July, the share price gained nearly 30% before reaching its 52-week high of $86.50 on April 27, 2018. The share price closed on May 8, 2018, at $82.58, which was 4.6% higher than it was 12 months earlier, 23.4% above the 52-week low from late July 2017 and 61% higher than it was five years ago.
The combined benefit of a rising dividend and a growing share price provide TJX’s investors with a 5.75% total return over the past 12 months. Investors over the longer term enjoyed even higher total returns of 28.7% over the past three years and 73% over the past five years.
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