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Kohl's Corp's Dividend Analysis

Exploring the Sustainability and Growth of Dividends at Kohl's Corp

Kohl's Corp (NYSE:KSS) recently announced a dividend of $0.5 per share, payable on 2024-06-26, with the ex-dividend date set for 2024-06-12. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Kohl's Corps dividend performance and assess its sustainability.

What Does Kohl's Corp Do?

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Kohl's operates about 1,174 department stores in 49 states that sell moderately priced private-label and national brand clothing, shoes, accessories, cosmetics, and home furnishings. Most of these stores are in strip centers. Kohl's also operates a large digital sales business. Women's apparel is Kohl's largest category, having generated 26% of its 2023 sales. The retailer, headquartered in Menomonee Falls, Wisconsin, opened its first department store in 1962.

Kohl's Corp's Dividend Analysis
Kohl's Corp's Dividend Analysis

A Glimpse at Kohl's Corp's Dividend History

Kohl's Corp has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Kohl's Corp's Dividend Analysis
Kohl's Corp's Dividend Analysis

Breaking Down Kohl's Corp's Dividend Yield and Growth

As of today, Kohl's Corp currently has a 12-month trailing dividend yield of 8.80% and a 12-month forward dividend yield of 8.80%. This suggests an expectation of same dividend payments over the next 12 months. Over the past three years, Kohl's Corp's annual dividend growth rate was 41.60%. Extended to a five-year horizon, this rate decreased to -4.30% per year. And over the past decade, Kohl's Corp's annual dividends per share growth rate stands at -0.80%.

Based on Kohl's Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Kohl's Corp stock as of today is approximately 7.06%.

Kohl's Corp's Dividend Analysis
Kohl's Corp's Dividend Analysis

The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-04-30, Kohl's Corp's dividend payout ratio is 0.81, which may suggest that the company's dividend may not be sustainable.

Kohl's Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Kohl's Corp's profitability 7 out of 10 as of 2024-04-30, suggesting good profitability prospects. The company has reported net profit in 8 years out of past 10 years.

Growth Metrics: The Future Outlook

To ensure the sustainability of dividends, a company must have robust growth metrics. Kohl's Corp's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Kohl's Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Kohl's Corp's revenue has increased by approximately 15.00% per year on average, a rate that outperforms approximately 72.79% of global competitors.

The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Kohl's Corp's earnings increased by approximately -27.00% per year on average, a rate that outperforms approximately 16.26% of global competitors.

Conclusion: Evaluating Kohl's Corp's Dividend Viability

Considering Kohl's Corp's recent dividend announcement, historical payout consistency, and current financial metrics, the dividend's sustainability hinges on several factors. While the high dividend yield is attractive, the mixed signals from its dividend growth rates and payout ratio require careful consideration. Investors should weigh these factors alongside the company's solid profitability and revenue growth prospects. For those interested in exploring further, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.

This article first appeared on GuruFocus.