Retail

Nordstrom Takes Up The Dividend Fight With Peers (JWN, JCP, M, DDS, SKS, KSS, SHLD)

Jon C. Ogg

Nordstrom, Inc. (NYSE: JWN) has raised its dividend, and the raise is substantial even if the yield is not.  The higher-end and luxury apparel retail department store hiked its dividend from $0.16 previously up to $0.20 per quarter.  With shares down 2.5% at $38.25, the $0.80 annualized dividend generates an implied yield of almost 2.1%.

J. C. Penney Company, Inc. (NYSE: JCP) is currently the highest dividend payer of department stores with a yield of 2.95%.  It annual dividend is also $0.80, but Thomson Reuters has its estimates pegged at $1.66 EPS for Jan-2011 and $2.13 EPS for Jan-2012.

What needs to be considered is Nordstrom’s dividend coverage.  Thomson Reuters has January 2011 earnings expectations at $2.62 EPS and $3.05 EPS for January-2011.  This is more than ample for dividend coverage, but this also shows that J.C.Penney pays out more of its income in the form of dividends.

Macy’s, Inc. (NYSE: M) has a dividend that does not quite come to 1% based on the current price, and Dillard’s Inc. (NYSE: DDS) has a dividend yield even lower than Macy’s.

Saks Incorporated (NYSE: SKS) is after the same market, yet due to the internal operating issues of Saks it is currently not able to pay a dividend.  While these may not be considered real competition in the same space of the market, both Kohl’s Corp. (NYSE: KSS) and Sears Holdings Corporation (NASDAQ: SHLD) are without a quarterly payout.

If you ask anyone out there, you’d be hard pressed to say that Nordstrom is the exact same department store as J.C. Penney.  Of the department stores, Penney has the pole position for the highest dividend yield.  Of the high-end chains, Nordstrom has the lock on the highest yield now.

JON C. OGG