Retail
3 Top Retail Stocks to Buy That Pay Dividends of Almost 5% and More
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One of the things that has troubled some of the Wall Street minds is a slower than expected pickup in retail sales. After all, the huge plunge in gasoline prices was supposed to put lots of extra spending cash into the pockets of consumers, with which they were expected to immediately shop. In reality, while retail sales are better, many households have used the windfall from lower prices at the pump to pay down debt and get their personal financial situations in order, which in the long run is a positive for retail spending.
We looked through our Wall Street research data base for retail companies that looked to be on the mend and that paid solid dividends. With the gas prices expected to remain low at least through this year, and probably in to 2017, the consumers now may be looking to buy some of the things they want and need with personal budgets in better shape. Three stocks look like great buys now.
GameStop
This top retailer looks to benefit from new releases. GameStop Corp. (NYSE: GME) operates as an omnichannel video game retailer. It sells new and pre-owned video game hardware; physical and digital video game software; pre-owned and value video game products; video game accessories, such as controllers, gaming headsets, memory cards and other add-ons for use with video game hardware and software; and digital products, including downloadable content, network points cards, prepaid digital and subscription cards and digitally downloadable software.
The company also sells mobile and consumer electronics, including smartphones, tablets, headphones and accessories, as well as pre-owned smartphones; personal computer (PC) entertainment software in various genres, including sports, action, strategy, adventure/role playing and simulation; and strategy guides, magazines and gaming-related toys. As of January 30, 2016, it operated approximately 7,117 stores in the United States, Australia, Canada and Europe. GameStop primarily offers its products under the GameStop, EB Games and Micromania names.
Leading Wall Street analysts feel that hardware updates and the holiday release slate this year should help the gaming segment. In addition, the second-half hardware refreshes and fourth-quarter high-quality product releases could help drive traffic to the stores. We recently covered its benefits from the recent Pokémon craze and also the company’s big expansion plans.
GameStop investors receive a 4.9% dividend. The Merrill Lynch price target for the stock is $35 and the Wall Street consensus price objective is$34.90. Shares closed Wednesday at $30.15.
Guess
This stock recently bounced off a 52-week low and could be heading higher. Guess? Inc. (NYSE: GES) designs, markets, distributes and licenses one of the world’s leading lifestyle collections of contemporary apparel and accessories for men, women and children that reflect the American lifestyle and European fashion sensibilities. Its apparel is marketed under numerous trademarks, including Guess and Marciano.
The company’s lines include full collections of clothing, including jeans, pants, skirts, dresses, shorts, blouses, shirts, jackets, knitwear and intimate apparel. It also selectively grant licenses to manufacture and distribute a broad range of products that complement its apparel lines, including eyewear, watches, handbags, footwear, kids’ and infants’ apparel, outerwear, swimwear, fragrance, jewelry and other fashion accessories.
Shareholders are paid a huge 6.3% dividend. Wunderlich rates the stock a Buy, with a gigantic $27 price target. The consensus target is $17.60. Shares closed most recently at $14.31.
Kohl’s
This top retailer has been pounded and could be offering investors a solid entry point. Kohl’s Corp. (NYSE: KSS) operates department stores in the United States. It offers private label, exclusive and national brand apparel, footwear, accessories, beauty and home products to children, men and women customers. The company also sells its products online at Kohls.com and through mobile devices. As of March 3, 2015, it operated 1,162 department stores in 49 states.
The company just reported a better-than-expected quarterly profit, helped by better control over inventories and warm weather that boosted sales of summer clothes and accessories. However, the company now expects adjusted earnings per share for the year ending January 2017 in a range that is lower than its previous forecast, but still a solid number.
Kohl’s shareholders receive a huge 5.3% dividend. The $42 Merrill Lynch price target compares with the consensus price target of $41, as well as the $44.04 hit Thursday morning after the earnings report.
These three top retail companies that all have a special niche in their sub-sectors. While not suitable perhaps for ultra-conservative accounts, they all fit in well with balanced accounts looking for solid total return.
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