Nordstrom Up on Quarterly Div Hike - Analyst Blog

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Shares of upscale department store operator, Nordstrom Inc. ( JWN ) inched up nearly 1% following its declaration of a 10% dividend hike on Feb 26, 2014.

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. ( FINL ) 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. ( FL ) and Myers Industries Inc. ( MYE ) 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.



FINISH LINE-CLA (FINL): Free Stock Analysis Report

FOOT LOCKER INC (FL): Free Stock Analysis Report

NORDSTROM INC (JWN): Free Stock Analysis Report

MYERS INDS (MYE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: FINL , FL , JWN , MYE

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