Retail gets another look from investors.
The retail sector has definitely had its share of trouble. But now, much of the pain has been priced in and American consumer metrics are running at all-time highs. That has set the stage for a resurgence of sorts for retail stocks — with some once-battered names up 20 percent or more since Jan. 1. Icing on the cake is that while many of these companies slumped, they fought hard to keep dividends intact. And now that the sector has stabilized, you can get some nice yields and invest with the confidence these merchants will keep those payouts steady. These seven retail stocks are worth a look right now.
Kohl’s Corp. (ticker: KSS)
With gains of 12 percent since Jan. 1 and 12-month returns of around 50 percent, Kohl’s definitely has some swagger back. That’s because it is putting up strong sales growth, including a fantastic showing last holiday season and a high-impact partnership with none other than Amazon.com (AMZN). And while shares are still a bit below their 2015 peak, the company hasn’t just maintained its dividend but has actually increased payouts in recent years. That’s because earnings have bounced back nicely and the KSS dividend remains less than half of corporate profits — making it quite sustainable, and ripe for future increases as well.
Current yield: 4.1 percent
Guess (GES)
Guess is one of the stock market’s top performers, with a 40 percent run for its stock price year-to-date and a share price that has more than doubled in the last 12 months. That’s because the stock has been putting up impressive numbers that have pleased Wall Street, including a big March earnings report that beat expectations on both the top and bottom lines. If that’s not enough to make you comfortable with the dividend, consider GES is also sitting on more than $360 million above regular cash flow. That cushion should make dividend investors rest easy that their payouts are secure.
Current yield: 3.9 percent
Gap (GPS)
Unlike some of the other retailers on this list, Gap’s performance has been soft in 2018. But that’s in large part because the stock made a big move in 2017, finishing the year strong thanks to an impressive holiday season. In fact, GPS was one of the sector’s top performers with a roughly 50 percent gain on the year. That’s because this merchant is connecting with its premium Banana Republic line offering good margins and its bargain Old Navy nameplate catering to cost-conscious consumers. GPS has a strong foundation with these stores, and that gives it a firm foundation for its dividend.
Current yield: 3.2 percent
Genuine Parts Co. (GPC)
A specialty retailer you may never have heard of is Genuine Parts, the parent behind NAPA car parts. It is one of the oldest and largest merchants of automotive parts and accessories in North America. More importantly for dividend investors, however, is the consistent history of growing payouts. Genuine Parts has increased its dividend at least once a year for more than 60 consecutive years. Admittedly, there’s not red-hot growth in the future for this niche retailer. But replacing brake pads and windshield wipers is a reliable business, and that allows for reliable payouts.
Current yield: 3.2 percent
Target Corp. (TGT)
Target got bad press over the last few years for serious strategic missteps, including an ill-conceived expansion into Canada and competition on prices constantly squeezing its margins. But Target got its groove back, thanks in large part to a huge digital push. Target acquired logistics firm Shipt at the end of 2017 for its same-day shipping functionality. While the acquisition isn’t expected to result in big sales growth this year, the future is bright for Target. And with an above-average dividend and shares that have gone up about 10 percent so far in 2018, there’s good reason to bet on this retailer’s future.
Current yield: 3.5 percent
Macy’s (M)
Macy’s has had plenty of ups and downs, seemingly with more downs. Shares have been cut in half since 2015 highs, and hit a five-year low last November. However, that may have been the bottom for Macy’s. Shares are up against a new 52-week high after nearly doubling from that brief bottom just before Thanksgiving. Like Target, Macy’s is also betting big on digital innovation like its “omnichannel” experience that aims to seamlessly integrate brick-and-mortar stores and with online sales. With a yield that is roughly double the typical blue-chip stock, investors have had good reason to give Macy’s the benefit of the doubt.
Current yield: 5.3 percent
DSW (DSW)
Footwear retailer DSW has had a hard time finding growth in the age of e-commerce, when shoppers can get the shoes they’re looking for mailed directly to their door with just a few clicks. But good dividend stocks don’t have to be impressive growth machines — they just need to provide reliable income. DSW shares have been remarkably stable for the last two or three years. Furthermore, the company is hedging its bet with constant expansion overseas — including its first store in Abu Dhabi. Investors looking for a reliable dividend payer to take to the bank may want to try on this stock.
Current yield: 4.6 percent
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7 Retail Stocks to Bag Big Dividends originally appeared on usnews.com
