Shares of upscale department store operator,
) inched up nearly 1% following its declaration of a 10% dividend
hike on Feb 26, 2014.
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NORDSTROM INC (JWN): Free Stock Analysis
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Management announced a quarterly dividend of 33 cents per share,
up from its previous dividend rate of 30 cents. The dividend
which is due on Mar 25, 2014 will be paid to stockholders of
record as on Mar 10, 2014.
Following the raise, the company's annualized dividend stands at
$1.32 cents per share, yielding nearly 2.1% with a payout ratio
of 32%. Further, the dividend yield of this Zacks Rank #4 (Sell)
company compares favorably with peers like
Finish Line Inc.
) and Abercrombie & Fitch Co. which have dividend yields of
1.2% and 2.0%, respectively.
Apart from paying dividends, Nordstrom is involved in enhancing
shareholder value by regularly buying back its common stock.
During the fourth quarter, the company bought back nearly 2.5
million shares for about $154 million. Currently, Nordstrom has
about $670 million worth of shares remaining under its existing
share repurchase authorization.
Apart from Nordstrom, other companies like
Foot Locker, Inc.
Myers Industries Inc.
) have also raised their quarterly dividends recently, by 10% to
22 cents a share and by 44% to 13 cents a share, respectively.
Dividend hike is a frequent practice among companies with a
stable cash position and a healthy cash flow. This seems to be
the case for Nordstrom as the company ended the year with a solid
cash balance of $1,194 million and generated $1,320 million from
its operating cash flow during fiscal 2013.
Dividend hikes not only enhance shareholders' return but also
raise the market value of a stock. Through this strategy,
companies bolster investors' confidence in the stock, thereby
persuading them to either buy or hold the scrip instead of
selling them. Looking ahead, Nordstrom stands confident of its
growth potential, suggesting enhanced value for its shareholders.