Tags: Kohls | growth | dividend | KSS

Kohl's for Steady Growth and a Dividend

By    |   Wednesday, 28 March 2012 12:06 PM

Department store chain Kohl's (KSS) recently started paying a quarterly dividend, adding value to the steady growth this company produces.

Kohl's stores sell a wide range of clothing, accessories and home appliances. To promote sales, the company sells lines of endorsed products by celebrities and designers, among them Vera Wang and Jennifer Lopez.

In 2011, Kohl's opened 40 new stores and remodeled 100 stores. At the end of 2011, Kohl's owned 1,149 stores in 49 states. In 2011 the company passed the milestone of $1 billion in e-commerce sales.

For 2011, Kohl's reported total revenue of $18.8 billion, up 2.2 percent from $18.4 billion in 2010. Net income for the year was $4.30 per share, up 17 percent from $3.66.

The income per share growth was partially due to a significant decrease in the number of shares outstanding. However, free cash flow also increased by 27 percent to $1.1 billion. The Wall Street consensus estimate for 2012 is net income of $4.78 per share.

First time dividend

Kohl's paid its first-ever dividend of 25 cents per share in March 2011. The quarterly rate was maintained throughout 2011 and increased to 32 cents per share for the first quarter of 2012. The shares currently yield 2.5 percent.

The $1.28 annual dividend rate represents a 27 percent payout ratio of expected 2012 earnings, leaving plenty of room for future dividend increases.

Kohl's generates approximately one-third of the company's annual revenue and 40 percent of net income during the holiday fourth quarter. In the 2011 fourth quarter, Kohl's reported a decline in results, with comparable store sales off by 2 percent compared to a year earlier.

Recently, the analysts at Jefferies and Company upgraded their rating on Kohl's to a buy from the previous hold rating.

The company next reports on May 10.

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