Advertisement
Australia markets close in 5 hours 33 minutes
  • ALL ORDS

    7,967.20
    +29.30 (+0.37%)
     
  • ASX 200

    7,713.50
    +30.00 (+0.39%)
     
  • AUD/USD

    0.6493
    +0.0004 (+0.07%)
     
  • OIL

    83.45
    +0.09 (+0.11%)
     
  • GOLD

    2,336.00
    -6.10 (-0.26%)
     
  • Bitcoin AUD

    102,531.41
    -572.08 (-0.55%)
     
  • CMC Crypto 200

    1,430.63
    +15.87 (+1.12%)
     
  • AUD/EUR

    0.6060
    +0.0003 (+0.06%)
     
  • AUD/NZD

    1.0926
    -0.0004 (-0.04%)
     
  • NZX 50

    11,864.99
    +61.71 (+0.52%)
     
  • NASDAQ

    17,471.47
    +260.59 (+1.51%)
     
  • FTSE

    8,044.81
    +20.94 (+0.26%)
     
  • Dow Jones

    38,503.69
    +263.71 (+0.69%)
     
  • DAX

    18,137.65
    +276.85 (+1.55%)
     
  • Hang Seng

    16,828.93
    +317.24 (+1.92%)
     
  • NIKKEI 225

    38,192.12
    +639.96 (+1.70%)
     

Kohl's' (NYSE:KSS) Dividend Will Be $0.50

The board of Kohl's Corporation (NYSE:KSS) has announced that it will pay a dividend on the 3rd of April, with investors receiving $0.50 per share. Based on this payment, the dividend yield on the company's stock will be 7.2%, which is an attractive boost to shareholder returns.

View our latest analysis for Kohl's

Kohl's Is Paying Out More Than It Is Earning

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Even though Kohl's isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

ADVERTISEMENT

The next 12 months is set to see EPS grow by 143.3%. If the dividend continues on its recent course, the company could be paying out several times what it earns in the next 12 months, which could start applying pressure to the balance sheet.

historic-dividend
historic-dividend

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of $1.40 in 2014 to the most recent total annual payment of $2.00. This means that it has been growing its distributions at 3.6% per annum over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

Dividend Growth Potential Is Shaky

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Kohl's' EPS has fallen by approximately 19% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

Kohl's' Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Kohl's (1 can't be ignored!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.