Investing

Are Retail and Apparel Dividend Yields Reaching Panic Levels?

Gap Inc. (NYSE: GPS) was trading at $22.25, and its dividend yield is now over 4.1%. Gap has been dead money for years now, and its 52-week range is $17.72 to $30.74.

Guess? Inc. (NYSE: GES) most recently approved a quarterly cash dividend of $0.225 per common share and, despite a loss projection, that would be a yield of right at 9%, if it is sustained at a $10 share price. Guess offered up earnings guidance for this current year in the range of $0.28 to $0.40 per share, so that $0.90 dividend is a head scratcher. Guess shares have a 52-week range of $9.56 to $18.68.

Nordstrom Inc. (NYSE: JWN) has found out the hard way that even luxury apparel is not immune to online and omnichannel sales. With shares at $41.25, its dividend yield is now up to about 3.6%. Nordstrom’s 52-week range is $35.01 to $62.82, and this was an $80 stock as recently as 2015.

Pier 1 Imports Inc. (NYSE: PIR) traded down at $5.10, in a 52-week range of $3.73 to $9.68. Its dividend yield is roughly 5.5%. Pier 1 shares used to be above $20, as recently as 2013.

Staples Inc. (NASDAQ: SPLS) was trading at $8.73, and the office supplies giant has a 52-week range of $7.24 to $10.25. Its yield is now about 5.5%. Staples is on the heels of a failed merger, and it is having a hard time finding any avenues of growth. Now with a $5.7 billion market cap, Staples was a $25 stock back in 2010.

Target Corp. (NYSE: TGT) was last seen at $54.15 and its dividend yield is about 4.4%, based upon a $2.40 annualized dividend. Target has a 52-week range of $52.72 to $79.33, and this was an $80 stock as recently as early 2016.

Wal-Mart Stores Inc. (NYSE: WMT) may be the one major retailer that can actually hold up to Amazon over time, due to it being the largest retailer in the world. Still, it has faced very sluggish same-store sales growth and its earnings history has been spotty. At $78.28 a share, its stock is still lower than its highs from prior years, and the Dow Jones Industrial Average component still has a dividend yield of about 2.6%. Wal-Mart’s 52-week range is $65.28 to $79.44, and this was an $85 stock back in 2014.

24/7 Wall St. recently gave a dire warning about value stocks, and dividends are a part of that warning. There are far more lessons than can be said, but the safety of most dividends can be determined by identifying future earnings and cash flow per share and then matching that up against liabilities and terms of a company’s statutory liquidity levels versus its total borrowings.

The argument that retail is under attack by Amazon and other online efforts is not a new one. It is now finally reaching the point that the yields are so high they should start to worry investors.

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