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GameStop Hikes Dividend - Analyst Blog

By: Zacks.com
Posted: 3/5/2014 11:20:00 AM
Referenced Stocks: FDO;GME;MDP;MHFI

GameStop Corp. ( GME ) recently increased its quarterly dividend by 20%, bringing the annualized payout to $1.32 per share with a healthy dividend yield of 3.5% based on yesterday's closing price of $37.35.

A dividend hike primarily reflects GameStop's sound financial position and healthy cash flow generating capabilities. The company remains committed to enhance shareholders' value. Since 2010, this video game retailer's share buybacks, debt repayments and dividend payout have aggregated over $2.1 billion.

The quarterly dividend, after the hike, will come to 33 cents a share, up from the prior payment of 27.5 cents. The enhanced quarterly dividend will be paid on Mar 25, 2014, to shareholders of record as on Mar 17, 2014.

In Feb 2013, this Zacks Rank #3 stock (Hold) last increased its quarterly dividend by 10% to 27.5 cents. Other companies that recently increased quarterly dividend include Meredith Corporation ( MDP ) and Family Dollar Stores Inc. ( FDO ). The companies raised their dividends by 6.1% to 43.25 cents and 19.2% to 31 cents, respectively. Another company, McGraw Hill Financial, Inc. ( MHFI ) recently hiked its dividend by 7.1% to 30 cents.

Dividend hikes not only enhance shareholder's return but raise the market value of the stock. Through this strategy, the companies bolster investor confidence in the stock, thereby persuading them to either buy or hold the scrip instead of selling them.

Earlier, this Grapevine, Texas based company reported holiday sales results. GameStop's global sales during the nine-week holiday period ended Jan 4, 2014 jumped 9.3%, while comparable-store sales rose 10.2%. New hardware sales surged 99.8%, whereas pre-owned category sales jumped 7% during the period.

However, sluggish sales of Xbox 360 and PlayStation 3 software resulted in a 22.5% drop in new software category sales. Consequently, the company lowered its earnings outlook.

Management now anticipates fourth-quarter earnings between $1.85 and $1.95 per share and fiscal year 2013 earnings in the band of $2.96 to $3.06 per share. Earlier, management had forecasted fourth-quarter earnings in the range of $1.97 to $2.14 and fiscal year 2013 earnings between $3.08 and $3.25 per share. The current Zacks Consensus Estimates for the fourth quarter and fiscal 2013 are $1.92 and $3.02, respectively.



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