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.
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?
Disclosure: I am long BKE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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