Assessing the Viability of Nordstrom's Upcoming Dividend Payment
Nordstrom Inc (JWN, Financial) recently announced a dividend of $0.19 per share, payable on 2023-12-13, with the ex-dividend date set for 2023-11-27. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Nordstrom Inc's dividend performance and assess its sustainability.
What Does Nordstrom Inc Do?
Nordstrom is a fashion retailer that operates about 94 department stores and approximately 250 off-price Nordstrom Rack stores. The company also operates both full- and off-price e-commerce sites, two clearance stores, and seven Local locations. Nordstrom's largest merchandise categories are women's apparel (28% of 2022 sales), shoes (26% of 2022 sales), men's apparel (15% of 2022 sales), and women's accessories (13% of 2022 sales). Nordstrom, which traces its history to a shoe store opened in Seattle in 1901, continues to be partially owned and managed by members of the eponymous family.
A Glimpse at Nordstrom Inc's Dividend History
Nordstrom Inc has maintained a consistent dividend payment record since 2022. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Nordstrom Inc's Dividend Yield and Growth
As of today, Nordstrom Inc currently has a 12-month trailing dividend yield of 5.05% and a 12-month forward dividend yield of 5.05%. This suggests an expectation of same dividend payments over the next 12 months. Over the past three years, Nordstrom Inc's annual dividend growth rate was -19.90%. Based on Nordstrom Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Nordstrom Inc stock as of today is approximately 5.05%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-07-31, Nordstrom Inc's dividend payout ratio is 4.00, and this may suggest that the company's dividend may not be sustainable.
Nordstrom Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Nordstrom Inc's profitability 6 out of 10 as of 2023-07-31, suggesting fair profitability. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Nordstrom Inc's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Nordstrom Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Nordstrom Inc's revenue has increased by approximately -1.20% per year on average, a rate that underperforms than approximately 64.73% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Nordstrom Inc's earnings increased by approximately -19.00% per year on average, a rate that underperforms than approximately 80.17% of global competitors.
Next Steps
In conclusion, while Nordstrom Inc offers an attractive dividend yield, the company's negative dividend growth rate and challenging earnings performance raise concerns about the long-term sustainability of its dividend payments. The low payout ratio may provide some cushion, but the company's profitability and growth metrics suggest that investors should keep a close eye on Nordstrom Inc's financial health and market position. As value investors consider Nordstrom Inc for its dividend prospects, it is crucial to monitor these factors to ensure that the dividend remains a reliable component of their investment strategy. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
