Dividends, dividend growth rate and percentage yield are all important factors when evaluating a firm’s worth and the value associated with investing in the company. While dividends are an integral part of this examination, it is important to remember that dividends alone do not determine the health of a firm. Each publically traded company has their own unique dividend policy that may or may not attract a certain type of investor. Dividend Ex-1
Costco is the outlier of the three firms and has paid out either no, or very minimal dividends to its investors. However, this does not mean that Costco is an unhealthy firm. They are simply equipping the clientele effect and targeting a certain type of investor. Their target investor does not need …show more content…
As seen above (Dividend Ex-2), the average for Walmart from 2012-2016 has been 6.55%. This appears fairly high, but there are also other factors at bay. For obvious reasons, dividend growth rate is only healthy if it outweighs inflation rate and the industry’s average growth rate. So, in order to ensure the health of this rate, we must compare it to those two factors as well. Dividend Ex-3 As seen above (Dividend Ex-3), this global retail industry has shrunk in dividends from 2012 to 2016 by 2.91%. Seeing as average inflation over these 5 years has been 1.29%, the industry is not keeping up with its dividend payments (or perhaps is switching to a different payout policy). While this is the case, Walmart seems to be the outlier with an average dividend growth rate of 6.55%. So, for an investor trying to find a stock with growing dividends, Walmart seems to be a viable option. The dividend policy of Kroger is fairly similar to Walmart. They favor paying out portions of net income in the form of dividend payout in order to attract a certain type of investor. All of the characteristics of Walmart investors will be very similar to Kroger investors. The investors will favor the current income over the tax break and reinvestment into the company through retained earnings. They will also use the dividend as a means for uncertainty …show more content…
The North American average for the industry started high at 1.50% in 2012, dipped to a low of .98% in 2014, and has trended up since 2014. Kroger has followed a similar trajectory, but continued its dip until 2015 in which yield dropped to a low of .9%. In one year, it has bounced back to a high of 1.50%. While Kroger follows nearly the same flow as the national average, it’s also obvious that Kroger’s yield has a higher rate of variance. Its highs are higher, as are its lows. This stock would be slightly riskier because of its variance. However, Kroger has been above the national average and would be a viable option for a dividend seeking investor. While it is a top contender in the North American food retail industry, its 1.34% average yield is no match for Walmart’s
Costco is the outlier of the three firms and has paid out either no, or very minimal dividends to its investors. However, this does not mean that Costco is an unhealthy firm. They are simply equipping the clientele effect and targeting a certain type of investor. Their target investor does not need …show more content…
As seen above (Dividend Ex-2), the average for Walmart from 2012-2016 has been 6.55%. This appears fairly high, but there are also other factors at bay. For obvious reasons, dividend growth rate is only healthy if it outweighs inflation rate and the industry’s average growth rate. So, in order to ensure the health of this rate, we must compare it to those two factors as well. Dividend Ex-3 As seen above (Dividend Ex-3), this global retail industry has shrunk in dividends from 2012 to 2016 by 2.91%. Seeing as average inflation over these 5 years has been 1.29%, the industry is not keeping up with its dividend payments (or perhaps is switching to a different payout policy). While this is the case, Walmart seems to be the outlier with an average dividend growth rate of 6.55%. So, for an investor trying to find a stock with growing dividends, Walmart seems to be a viable option. The dividend policy of Kroger is fairly similar to Walmart. They favor paying out portions of net income in the form of dividend payout in order to attract a certain type of investor. All of the characteristics of Walmart investors will be very similar to Kroger investors. The investors will favor the current income over the tax break and reinvestment into the company through retained earnings. They will also use the dividend as a means for uncertainty …show more content…
The North American average for the industry started high at 1.50% in 2012, dipped to a low of .98% in 2014, and has trended up since 2014. Kroger has followed a similar trajectory, but continued its dip until 2015 in which yield dropped to a low of .9%. In one year, it has bounced back to a high of 1.50%. While Kroger follows nearly the same flow as the national average, it’s also obvious that Kroger’s yield has a higher rate of variance. Its highs are higher, as are its lows. This stock would be slightly riskier because of its variance. However, Kroger has been above the national average and would be a viable option for a dividend seeking investor. While it is a top contender in the North American food retail industry, its 1.34% average yield is no match for Walmart’s