Williams-Sonoma Offers Solid Growth, Rising Dividend


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As the housing market recovers, homebuilder stocks are not the only way to get exposure to the trend. Furniture and home goods retailers likeWilliams-Sonoma ( WSM ) provide another alternative.

The operator of Pottery Barn, West Elm, WS Home and Rejuvenation stores offers investors double-digit bottom-line growth and rising cash dividends.

On Tuesday, the company beat views with Q4 earnings that climbed 15% to $1.34 a share. Views were for $1.29 a share. Williams-Sonoma's profit grew between 13% and 20% in the latest four quarters.

Thanks to strength at its West Elm stores, sales climbed 11% to more than $1.4 billion. That marked the third straight period of accelerating revenue growth, as well as the first double-digit gain in eight quarters.

Also on Tuesday, Williams-Sonoma upped its quarterly dividend by a whopping 41% to 31 cents a share. The company started paying quarterly dividends in 2006. It has more than tripled the payout since then.

The company will distribute the payment May 24 to shareholders of record April 26.

Williams-Sonoma pays $1.24 a share on an annual basis, resulting in a yield of 2.5%. That's about the same as the S&P 500's yield, but it's the highest yield in IBD's Retail-Home Furnishings industry group.

Besides returning cash to shareholders through dividends, the company also unveiled a $750 million stock buyback plan Tuesday. The buyback program is expected to run for three years.

Williams-Sonoma gapped up to a record high Wednesday, then lost a bit of ground in Thursday's session. With this move, the stock has cleared a relatively shallow consolidation that dates back to November and featured resistance around the 47 to 48 level.

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

This article appears in: Personal Finance , Investing Ideas

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