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Dividend Leader Dollar General Eyes Aggressive Growth

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D ollar General lost out on its bid to acquire Family Dollar Stores, but Wall Street doesn't seem too worried, as the stock continues to hold near highs amid robust expansion plans. In January,Family Dollar Stores ( FDO ) shareholders overwhelmingly approvedDollar Tree 's ( DLTR ) offer. It was lower thanDollar General 's ( DG ) but came with more regulatory certainty.

When Dollar General reported quarterly earnings in March, it outlined aggressive growth plans. The company, which operated nearly 11,800 stores in 40 states as of January 30, plans to open another 730 this year and relocate or remodel another 875. In 2016, it plans to add 900 stores.

The company's execution has been solid in recent quarters. Earnings and sales growth has accelerated for two straight quarters. Same-store sales growth has also been picking up the pace. In fiscal 2014, the company posted quarterly same-store sales growth of 1.5%, 2.1%, 2.8% and 4.9%.

As part of its earnings release, Dollar General initiated a quarterly cash dividend of 22 cents a share.

Dollar General has also been busy with share buybacks. In 2014, the company repurchased $800 million, or 14.1 million shares. Its board recently authorized an additional $1 billion for share buybacks.

Shares jumped nearly 3% in strong volume Wednesday after Deutsche Bank raised its price target to 85 from 80, citing accelerating store growth and labor investment as the Dollar Tree/Family Dollar merger works its way through the Federal Trade Commission.

Finally, no one disputes Warren Buffett's track record of investing success, but he pulled the trigger a bit early when he decided to sell his position in Dollar General in 2013.

He held the position for less than two years. Dollar General has risen about 50% since Buffett's sale.

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


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

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