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  • Cherokee (CHKE) - A Fashionable High Dividend Stock 1 comment
    Sep 4, 2009 10:26 AM | about stocks: CHKE, GPS, ICON, VFC, NKE
    Is it possible for fashion and high dividend stocks to intersect? In the words, (or letters), of the acronym-obsessed, OMG!  

    Fashion-savvy investors searching for dividend stocks may be happy to discover that,  with it's 9.5%-plus current dividend yield, apparel licensor Cherokee has, by far, the highest dividend in it's apparel peer group.  CHKE just announced its 24th consecutive quarterly dividend, which they maintained at $.50, and has paid out over $125 million in dividends to shareholders since 2003.  Their 5-year dividend growth rate is 46.14 %, vs. the industry average of only 3.29%.

    Their management effectiveness ratios, and revenue/employee dwarf their competition also:

     Cherokee (CHKE)Industry
    Return on Equity53.589.53
    Return on Investment67.224.83
    Return on Assets38.144.06
    Revenue/Employee$1.68 million$.38 million













    Cherokee also has a very strong balance sheet, with no debt.

    The company has strong international exposure, in Eastern Europe, UK, Asia, Mexico, and Canada.  
    Like any US company with overseas earnings, a strong dollar can sometimes hamper earnings, as it did in CHKE's most recent quarterly report, pushing down income by  7 cents/share.  Conversely, if the US dollar eventually weakens, as many economists are predicting, CHKE should benefit.

    It's 2 biggest customers are Target, in the U.S., and Tesco, internationally.  CHKE is in a highly competitive field, loaded with tough competitors such as Gap, Iconix, VF, and Nike, and must continue to innovate, and diversify its customer and geographical base, in order to grow.

    CHKE opened today at $20.25, and has a P/E of 13.22, well below it's 5-year P/E high of 20.53, and the industry average P/E of 20.06.  Like many stocks, it's had quite a run up from its 52-week low, ($10.38), and currently sits just 14.47% below its 52-week high of $23.57.

    So, if you're a slave to fashion, looking to turn your fashion sense into dividend "cents", CHKE might just be one of the best stocks to buy on a pullback.

    Disclosure: Author is not long shares of CHKE, but is a fan of Project Runway.

    Themes: stocks, high dividend stocks, dividend, best stocks to buy, dividend stocks, dividend yield, dividend paying stocks, dividend growth Stocks: CHKE, GPS, ICON, VFC, NKE
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