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Dick's Sporting Goods (DKS) is a Top Dividend Stock Right Now: Should You Buy?


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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show tha t dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Dick's Sporting Goods in Focus

Dick's Sporting Goods (DKS) is headquartered in Coraopolis, and is in the Retail-Wholesale sector. The stock has seen a price change of 17.76% since the start of the year. Currently paying a dividend of $0.28 per share, the company has a dividend yield of 2.99%. In comparison, the Retail - Miscellaneous industry's yield is 0.58%, while the S&P 500's yield is 1.88%.

Looking at dividend growth, the company's current annualized dividend of $1.10 is up 22.2% from last year. Over the last 5 years, Dick's Sporting Goods has increased its dividend 5 times on a year-over-year basis for an average annual increase of 14.29%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Dick's's current payout ratio is 34%. This means it paid out 34% of its trailing 12-month EPS as dividend.

DKS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $3.33 per share, with earnings expected to increase 2.78% from the year ago period.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, DKS presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).


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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 Nasdaq, Inc.





This article appears in: Investing , Investing Ideas , Stocks
Referenced Symbols: DKS



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