A Comprehensive Evaluation of Foot Locker Inc's Dividend Performance and Sustainability
Foot Locker Inc(FL, Financial) recently announced a dividend of $0.4 per share, payable on 2023-10-27, with the ex-dividend date set for 2023-10-12. 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 delve into Foot Locker Inc's dividend performance and assess its sustainability.
What Does Foot Locker Inc Do?
Foot Locker Inc operates thousands of retail stores throughout the United States, Canada, Europe, Australia, and New Zealand. It also has one franchisee in the Middle East and one in South Korea, each of which operates multiple stores in those regions. The company primarily sells athletically inspired shoes and apparel. Foot Locker's merchandise comes from only a few suppliers, with Nike providing the majority. Store names include Foot Locker, Champs, and Runners Point. The company also has an e-commerce business selling through Footlocker.com, Eastbay, and Final-Score.
A Glimpse at Foot Locker Inc's Dividend History
Foot Locker Inc has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Foot Locker Inc's Dividend Yield and Growth
As of today, Foot Locker Inc currently has a 12-month trailing dividend yield of 7.56% and a 12-month forward dividend yield of 0.00%. This suggests that the company's dividend payments may not be predictable.
Over the past three years, Foot Locker Inc's annual dividend growth rate was 1.70%. Extended to a five-year horizon, this rate decreased to -1.30% per year. And over the past decade, Foot Locker Inc's annual dividends per share growth rate stands at 4.90%.
Based on Foot Locker Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Foot Locker Inc stock as of today is approximately 7.08%.
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 2023-07-31, Foot Locker Inc's dividend payout ratio is 1.01. This may suggest that the company's dividend may not be sustainable.
Foot Locker Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Foot Locker Inc's profitability 9 out of 10 as of 2023-07-31, 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. Foot Locker Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Foot Locker Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Foot Locker Inc's revenue has increased by approximately 7.70% per year on average, a rate that outperforms approximately 63.61% 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, Foot Locker Inc's earnings increased by approximately -7.00% per year on average, a rate that outperforms approximately 28.24% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 11.80%, which outperforms approximately 58.04% of global competitors.
Next Steps
In conclusion, Foot Locker Inc's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics indicate a complex picture of dividend sustainability. The company's strong profitability and growth metrics suggest a healthy capacity for sustained dividends. However, the high payout ratio and unpredictable dividend payments call for investor caution. It is crucial for investors to further examine these factors and make informed decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
