With the holiday shopping season in full gear, malls across the country are packed with shoppers looking for that perfect gift. Reports indicate that this year holiday spending will increase by just over 1% from last year, with average consumer spending $688.87 compared to $681 in 2009. What's more, comScore (Nasdaq:SCOR), one of the leaders in digital forecasting and measurements, predicts online sales to jump a whopping 11% this year, with total online sales eclipsing $30 billion.

With that in mind, let's take a look at some retailers that should see strong traffic and also reward their shareholders with a dividend.

IN PICTURES: Learn To Invest In 10 Steps

Projections for The Gap
Probably the name most synonymous with retail during the holidays, The Gap (NYSE:GPS) should see strong sales at its namesake stores following a surprising October in which management reported a same store sales increase of 2% over last year, when analysts were expecting a 2.8% decline. While most point to store-wide discounting to clear inventory before the holiday season, this could also be a sign that the all-American brand is seeing some momentum going into the most important two months of the year.

Its Old Navy and Banana Republic brands should also do well this season as promotions have raised awareness with the broad consumer base. This includes a huge sales day in late August with the group coupon site Groupon in which close to 450,000 discount coupons were purchased in less than 24 hours. Note that this past Friday was the last day to use these coupons. If you're bullish on The Gap, you'll also like the fact that it pays a 2% dividend to shareholders and the stock is up close to 10% in the past month as investors rally behind the apparel giant.

Strong Holidays Ahead for The Buckle
Another retailer that should see increased sales this holiday season is The Buckle (NYSE:BKE). The trendy retailer has been on a tear recently, beating analyst estimates in its latest Q3 earnings. There was good news across the board as revenues, earnings and comps all increased and online sales rose an astounding 21% in the quarter - a good sign that The Buckle should see strong sales both in-store and online in November and December.

While some analysts are quite bearish on the stock, noting weak macro-trends in teen/young adult retailing, the holiday season can be excused from this outlook. The dividend yield on the stock is a shade over 2%, but to add fuel to the fire, the company's board authorized a special shareholder dividend of $2.50 during its third quarter earnings release. This is great news for investors looking for a strong income paying retail play.

Big Hopes for V.F. Corp
The last retail name on our list falls under the "apparel company" banner, as opposed to the true retail model of Gap and Buckle. V.F. Corp (NYSE:VFC) designs, manufacturers and sources (from independent contractors) a wide line of clothing and footwear to an even wider range of demographics. Some well known V.F. brands include house hold names like Wrangler, Nautica, Vans, 7 for All Mankind and The North Face.

The analysts who cover V.F. are in agreement across that board that Q4 should be a strong one for the company, with nearly every analyst upgrading the stock in the past month or so following impressive third quarter results in which management increased guidance and beat analyst estimates on basically all-fronts. The stock pays a 3% dividend and has gone nowhere since its strong third quarter and subsequent upgrades. This might be an opportunity to get into a company with great sales momentum and quality brand names for the fourth quarter.

Bottom Line
With this holiday season expected to be a strong one for retailers across the board, investors looking for income from the retail sector would be wise to take a closer look at these three stocks. (To learn more, see Analyzing Retail Stocks.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  2. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  3. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  4. Fundamental Analysis

    Using Decision Trees In Finance

    A decision tree provides a comprehensive framework to review the alternative scenarios and consequences a decision may lead to.
  5. Economics

    Understanding Tragedy of the Commons

    The tragedy of the commons describes an economic problem in which individuals try to reap the greatest benefits from a given resource.
  6. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  7. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  8. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  9. Stock Analysis

    Home Depot: Can its Shares Continue Climbing?

    Home Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
  10. Stock Analysis

    Yelp: Can it Regain its Losses in 2016? (YELP)

    Yelp investors have had reason to be happy recently. Will the good spirits last?
  1. Is Colombia an emerging market economy?

    Colombia meets the criteria of an emerging market economy. The South American country has a much lower gross domestic product, ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  4. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  5. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

You May Also Like

Trading Center