Seeking Alpha
Long/short equity, deep value, special situations
Profile| Send Message|
( followers)  

Summary

  • Buckle doesn't get enough credit for its dividend policy.
  • Special dividends have been coming every year.
  • Over the last 5 years, the dividend represents an impressive 16.7% share of revenue.

The Buckle (NYSE:BKE) doesn't get enough credit for its shareholder-friendly dividend policy. Every year, Buckle gives large special dividends in addition to its regular dividend. Because Buckle earns a high operating margin (22% over the last 5 years) and returns almost all of its free cash to shareholders, the dividends have been enormous.

Most of the time, dividends are viewed in terms of the percentage paid from earnings. I'd like to look at Buckle's dividends in a different way. Instead of looking at the payout, let's calculate how much of the company's revenues was given back to shareholders in the form of dividends.

Over the last 5 years, Buckle sold $4.8 billion of apparel. Impressively, out of that revenue, the retailer returned $800 million to shareholders in the form of dividends - equal to a third of the company's market capitalization.

In effect, every time a customer buys a $90 pair of jeans, Buckle's collective investors receive a check for $15. Incredible as it sounds, Buckle's dividends (special dividends + regular dividends) over the last 5 years amounted to 16.7% of revenue. There are very few companies that have returned as high a proportion of their sales to investors.

Most retailers are far less generous with their dividends. Consider American Eagle (NYSE:AEO) and Guess? (NYSE:GES), two apparel sellers known for their high dividend yields. For every $100 a customer spent over the last 5 years, American Eagle handed out $5.20 while Guess? handed out $4.70. While not a retailer, Coca-Cola (NYSE:KO) paid a more generous $10.50. AT&T (NYSE:T) returned $7.90. A few non-retailers beat Buckle, though there aren't many. For instance, Altria (NYSE:MO) gave its shareholders an $18.30 check out of each $100 of revenue.

In short, Buckle's $16.70 in dividends for every $100 a customer spends looks mighty generous when you look throughout the retail aisles.

Bottom Line:

Few companies come close to Buckle's generous dividend policy. Investors share in the retailer's profits like "real" owners. Isn't that the way it is supposed to be?

Source: The Buckle: Being Treated Like 'Real Owners'

Additional disclosure: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.