Assessing the Dividend Profile of a Leading Discount Retailer
Dollar General Corp (DG, Financial) recently announced a dividend of $0.59 per share, payable on 2024-04-23, with the ex-dividend date set for 2024-04-08. 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 Dollar General Corp's dividend performance and assess its sustainability.
What Does Dollar General Corp Do?
With over 20,000 locations, Dollar General's banner is nearly ubiquitous across the rural United States. Dollar General serves as a convenient shopping destination for fill-in store trips, with its value proposition most relevant to consumers in small communities with a dearth of shopping options. The retailer operates a frugal store of about 7,500 square feet and primarily offers an assortment of branded and private-label consumable items (80% of net sales) such as paper and cleaning products, packaged and perishable food, tobacco, and health and beauty items at low prices. Dollar General also offers a limited assortment of seasonal merchandise, home products, and apparel. The firm sells most items at a price point of $10 or lower.
A Glimpse at Dollar General Corp's Dividend History
Dollar General Corp has maintained a consistent dividend payment record since 2015, distributing dividends on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Dollar General Corp's Dividend Yield and Growth
As of today, Dollar General Corp currently has a 12-month trailing dividend yield of 1.48% and a 12-month forward dividend yield of 1.48%, suggesting an expectation of consistent dividend payments over the next 12 months.
Over the past three years, Dollar General Corp's annual dividend growth rate was 17.90%. Extended to a five-year horizon, this rate decreased to 16.50% per year. Based on Dollar General Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Dollar General Corp stock as of today is approximately 3.18%.
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 2024-01-31, Dollar General Corp's dividend payout ratio is 0.31.
Dollar General Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Dollar General Corp's profitability 9 out of 10 as of 2024-01-31, suggesting good profitability prospects. The company has reported positive net income for each of 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. Dollar General Corp's growth rank of 9 out of 10 suggests that the company's growth trajectory is strong relative to its competitors.
Revenue is the lifeblood of any company, and Dollar General Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Dollar General Corp's revenue has increased by approximately 9.20% per year on average, outperforming approximately 66.67% 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, Dollar General Corp's earnings increased by approximately -10.80% per year on average, outperforming approximately 15.29% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.60%, outperforms approximately 39.08% of global competitors.
Next Steps
In conclusion, Dollar General Corp's dividend payments, growth rate, payout ratio, profitability, and growth metrics collectively depict a company with a strong dividend profile. The consistency in dividend growth and a reasonable payout ratio coupled with a robust profitability rank and favorable growth metrics suggest that Dollar General Corp is positioned to maintain its dividend payments in the foreseeable future. Investors seeking dividend stability and growth may find Dollar General Corp an attractive option to consider. Would Dollar General Corp's dividend sustainability and growth prospects make it a valuable addition to your investment portfolio?
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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.
