The Gap, Inc. Keeps Dividend Intact

GPS

Summary; The Gap Incorporated announced a regular quarterly dividend of $0.23 per share, the same as the previous year. In 2015, The Gap announced a 5 percent increase from the prior rate of $0.22 per share.  The Gap is an American retailer with several outlets including The Gap, Banana Republic, Old Navy, and Athleta. The Board of Directors also approved a new $1 billion share repurchase authorization for the company’s common stock, superseding the existing authorization dated February 26, 2015.  The Gap returned about $1.4 billion through share repurchases and dividends in fiscal year 2015.

The company also announced that its Board of Directors authorized the first quarter fiscal year 2016 dividend of $0.23 per share, payable on or after April 27, 2016 to shareholders of record at the close of business on April 6, 2016.

Date Quarterly Dividend
4/6/2016 0.23
1/3/2016 0.22
10/3/2015 0.22
7/5/2015 0.22
4/8/2015 0.23
1/5/2015 0.22
10/6/2014 0.22
7/7/2014 0.22
4/7/2014 0.22
1/6/2014 0.2
10/11/2013 0.2
7/8/2013 0.15
4/8/2013 0.15
12/28/2012 0.125
10/5/2012 0.125
6/29/2012 0.125
4/3/2012 0.125
12/30/2011 0.113
10/7/2011 0.113
7/1/2011 0.113
4/4/2011 0.113
1/3/2011 0.1
10/8/2010 0.1
7/2/2010 0.1
4/5/2010 0.1
1/4/2010 0.085
Price 2/25/16 % Yield 5 Year Div. Growth Rate SPS 2015 P/S  Ratio 10 yr P/S  Low 10 yr P/S  High 5 yr max Yield % 5 yr lowest Yield %
27.60 3.30% 10.5 41.45 0.57 0.45 1.37 3.65% 1.33%

Final Analysis;

Positives;

  • The Gap’s dividend yield is above that of the S&P 500 Index.
  • The Gap maintains a 5 year dividend growth rate of 10.5%.
  • The Gap is trading at a modest forward P/E ratio, below the market.
  • The Gap maintains a credit rating of BBB-. This is at the lowest category of investment grade.

Negative;

  • The stock price has fallen from a high of $42.33 to $27.60 today. The stock is trading at a high historical yield, very low P/S ratio, and has an investment grade rating.  Gap qualifies as one of our Top 100 stocks.

 

Explanation:  Dividend growth stocks may be valued upon historical relative price/sales and current yield analysis. Dividend stocks trading at a low historical price/sales (P/S) ratio should be viewed more highly to investors due to their depressed valuation versus other higher P/S ratio stocks.  Max P/S price target is based upon company reaching its highest historical P/S ratio.  Dividend stocks should also be viewed favorably when the current yield is above historical readings for the past 10 years.

Further information on evaluating dividend growth candidates can be found

at http://seekingalpha.com/author/timothy-mcintosh/articles

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