Understanding the Dividend Prospects of Ross Stores Inc
Ross Stores Inc(ROST, Financial) recently announced a dividend of $0.34 per share, payable on 2023-12-29, with the ex-dividend date set for 2023-12-04. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Ross Stores Inc's dividend performance and assess its sustainability.
What Does Ross Stores Inc Do?
Ross Stores is a leading American off-price apparel and home fashion retailer, operating over 2,000 stores (at the end of fiscal 2022) under the Ross Dress for Less and dd's Discounts banners. Ross offers a variety of name-brand products and targets undercutting conventional retailers' regular prices by 20%-70%. The company uses an opportunistic, flexible merchandising approach; together with a relatively low-frills shopping environment centered on a treasure-hunt experience, Ross maximizes inventory turnover and traffic, enabling its low-price approach. In fiscal 2022, 26% of sales came from home accents (including bed and bath), 24% from the ladies' department, 15% from menswear, 14% from accessories, 12% from shoes, and 9% from children's. All sales were made in the United States.
A Glimpse at Ross Stores Inc's Dividend History
Ross Stores Inc has maintained a consistent dividend payment record since 1994. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Ross Stores Inc's Dividend Yield and Growth
As of today, Ross Stores Inc currently has a 12-month trailing dividend yield of 1.00% and a 12-month forward dividend yield of 1.01%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Ross Stores Inc's annual dividend growth rate was 6.70%. Extended to a five-year horizon, this rate increased to 8.20% per year. And over the past decade, Ross Stores Inc's annual dividends per share growth rate stands at an impressive 12.90%.
Based on Ross Stores Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Ross Stores Inc stock as of today is approximately 1.48%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-10-31, Ross Stores Inc's dividend payout ratio is 0.26.
Ross Stores Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Ross Stores Inc's profitability 8 out of 10 as of 2023-10-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Ross Stores Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Ross Stores Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Ross Stores Inc's revenue has increased by approximately 6.80% per year on average, a rate that outperforms approximately 58.28% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Ross Stores Inc's earnings increased by approximately -1.60% per year on average, a rate that outperforms approximately 33.45% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -4.20%, which outperforms approximately 23.88% of global competitors.
Concluding Insights on Ross Stores Inc's Dividend Fortitude
Considering Ross Stores Inc's consistent dividend payments, a solid track record of dividend growth, a sustainable payout ratio, and strong profitability and growth metrics, investors may find confidence in the company's ability to maintain and potentially increase its dividend payouts in the future. The robust financial health indicated by these factors suggests that Ross Stores Inc is well-positioned to continue rewarding its shareholders while investing in future growth. As value investors seek to enhance their portfolios with resilient dividend stocks, Ross Stores Inc presents a compelling case for consideration.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
