Active Dividends In Sports Retail

By Investopedia Staff | March 03, 2011 AAA

The retail space had a pretty good month in February, returning 3.2%, as represented by the SPDR S&P Retail ETF (NYSE:XRT). While many retail companies offer dividends to their shareholders, we'll look at some of the sports retail companies and their performance, along with the dividends they offer for holding their shares.

IN PICTURES: 5 Tips For Diversifying Your Portfolio

Sports Retail Success
Staring things off is probably the name most synonymous with sporting goods and apparel retail, Foot Locker (NYSE:FL). The sports retail giant had a huge month of February, rallying 8.35%, with call volume rising throughout the month. Additionally, management announced mid-month that Foot Locker would be hiking the dividend 10% to 16.5 cents per share beginning in April. This equates to a dividend yield of about 3.3%, very good for a retailer of its size. The company also reported strong third-quarter earnings in December, with profits rising dramatically to 33 cents per share, compared to 4 cents per share loss the year prior. Analysts had expected only 16 cents, so needless to say the street was impressed. Revenues were also up for the period to the tune of 5.4%. A strong holiday season should be reflected in the yea-end earnings and investors are hoping the stock can maintain its momentum.

Foot Locket rival The Finish Line (Nasdaq:FINL) has fared just as well as its competitor. The Finish Line was actually up roughly 12% in February, and in the past year is up nearly 40%. The stock's performance hasn't necessarily been indicative of the company's performance, however. Both Q2 and Q3 earnings were weak, with Q3 earnings falling 38% from the year prior. However, last year's third-quarter results were boosted in large part to a tax benefit for the quarter. Revenue was up a healthy 8.7% to $260 million from $240 million. Year-end earnings are set to be announced in late March, and many are curious to see if The Finish Line can deliver stronger results than it has in recent quarters. The stock's 1.2% dividend however may entice some to jump in and take a bullish bet.

Brands Going for the Gold
Lastly we have the world's biggest athletic brand, Nike (NYSE:NKE). While not a pure retail apparel play, Nike is the engine that drives the sporting goods and apparel industry. Along with Under Armour (NYSE:UA), whose stock has exploded in the past year, up nearly 140%, Nike has seen strong results translate to all-time highs in the stock this past year.

Nike's profits in the second quarter rose 22% to $457 million, or 94 cents per share, from $375 million, or 76 cents per share, the year prior, beating analysts' estimates by 6 cents. Revenues in the quarter were up 10% to $4.84 billion, again beating the $4.81 billion analysts had expected. Future orders, a key metric of revenue growth, rose 11%, which was below expectations, sending the stock back down to Earth from its all-time highs. Shares have recovered nicely, however, to just under $88 and a strong third-quarter release should send shares back into the 90s. Add to this a 1.4% dividend and investors should take a look at Nike.

Bottom Line
All of the stocks mentioned have performed extremely well in the past year, and more currently, the past month. Do your research and see if these dividend paying sports stocks should play an "active" role in your portfolio. (To learn more, see Analyzing Retail Stocks.)

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

comments powered by Disqus
Related Analysis
  1. A Stock To Buy, A Stock To Short In This Fading Industry

    A Stock To Buy, A Stock To Short In This Fading Industry

  2. Looking Ahead to Q3 Earnings Season - Earnings Trends
    Stock Analysis

    Looking Ahead to Q3 Earnings Season - Earnings Trends

  3. Blue Chip Less Than $2 Away From A Breakout 'Buy' Signal

    Blue Chip Less Than $2 Away From A Breakout 'Buy' Signal

  4. This Widely-Held Blue Chip Could Pop 8% In 4 Weeks

    This Widely-Held Blue Chip Could Pop 8% In 4 Weeks

  5. Unconventional Drilling Still Has Room To Boom
    Stock Analysis

    Unconventional Drilling Still Has Room To Boom

Trading Center