New Dividend Adds Luster to Dollar General Earnings

The company said that it will pay its first-ever quarterly dividend payment of $0.22 payable in late April to shareholders of record on April 8. At Wednesday’s closing price of $71.45, that works out to a dividend yield of about 1.2%.

For the full year, Dollar General posted adjusted EPS of $3.50 on revenues of $18.91 billion, compared with EPS of $3.17 on revenues of $17.5 billion in fiscal 2013. The consensus estimates called for EPS of $3.50 on revenues of $18.92 billion.

ALSO READ: Retail’s Biggest Winners and Losers

The company said that same-store sales rose 4.9% in the fourth quarter, driven by sales growth of candy and snacks, tobacco, perishables and health care. For the full year, same-store sales rose 2.8%. Net sales rose 8% year-over-year for the full year and 9.9% for the fourth quarter.

In its outlook statement, Dollar General said it expects full-year 2015 sales to rise 8% to 9% above the 2014 total, and same-store sales are forecast to rise 3.0% to 3.5%. Diluted EPS is forecast in a range of $3.85 to $3.95 and assumes share repurchases totaling $1.3 billion. Consensus estimates call for full-year EPS of $3.99 on revenues of $20.54 billion.

The company plans to open 730 new stores in 2015 and relocate or remodel an additional 875. Based on its record of strong returns from new stores, Dollar General expects to accelerate new store openings in 2016.

The company’s CEO said:

The expanded capital return plan for shareholders we announced today is based on the confidence of the Dollar General Board of Directors in the Company’s long-term growth prospects, financial outlook and cash flow generation. This plan represents a balanced approach to our commitment to delivering increased value to our shareholders by investing in future growth and returning capital to our shareholders through share repurchases and dividends.

Two analysts have weighed in on Dollar General within the past month. J.P. Morgan reiterated an Overweight rating with a price target of $85 that implies an upside of 19% from Wednesday’s close. Piper Jaffray posted a Buy rating on the stock and raised its price target from $73 to $85.

Shares traded up about 0.8% in the premarket session Thursday, at $72.00 in a 52-week range of $53.00 to $73.53. Thomson Reuters had a consensus analyst price target of $77.74 before the results were announced.

ALSO READ: 10 Retailers Closing the Most Stores