TJX shareholders get (another) 20 percent raise

unnamed

DOUBLE THE DEALS: TJX Cos. has a T.J. Maxx store immediately abutting a HomeGoods store off Route 102 in Londonderry, N.H. Customers can browse both stores without having to leave and re-enter.  

How would you have like to have gotten a 20 percent raise in each of the past four years? If you were a shareholder of TJX Companies Inc., owner of the discount T.J. Maxx, Marshalls and HomeGoods chains, you know what I’m talking about.

Framingham-based TJX Companies Inc. on Friday announced the declaration of a quarterly dividend on its common stock of 31.25 cents per share payable Nov. 30, to shareholders of record on Nov. 9.

This will mark the second consecutive quarter that TJX will have issued that payout, after increasing it from 26 cents per share, or 20.6 percent, during the spring.

That’s a great annual percentage raise, and it’s not exactly news for TJX shareholders.In 2013, the first year the company issued a dividend, the quarterly payout was just 14.5 cents per share. It increased 20.7 percent, to 17.5 cents per share the following year, and then another 20 percent, to 21 cents per share, in 2015. Then it went up by 23.8 percent, to 26 cents per share in 2016.

Shares closed Friday at $73.74, up 53 cents on the day. They’re actually down a bit — 50 cents, or 0.7 percent) from the start of the year.

The stock actually hasn’t done a lot in four years — it closed out 2013 at $63.73, 2014 at $66.11, 2015 at $69.15 and last year at $74.24. It’s been a steady, if unspectacular rise, and there’s been very little volatility. Yahoo Finance reports a beta of 0.44, meaning the shares are less than half as valuable as the market as a whole.

The elephant in the closet: Yeah, but TJX is retail, and thanks in large part to Amazon, retail stocks have stunk. So far, TJX has been relatively immune to Amazon’s threat. TJX is cheap, it turns its merchandise over quickly and its customers seem to know exactly what to expect when they come inside the store. And they get it.

Furthermore, according to a recent article in Forbes, TJX has just four senior vice presidents in addition to its CEO. Macy’s has 10. So TJX appears to run a tight ship.

Valuation? Admittedly, meh.. It sells for 21 times trailing 12-month earnings and 17 times forward earnings (that is, what’s expected in the current fiscal year, which ends in January). So it’s not a blow-you-away bargain. But for what it’s worth, it’s in the same league as Walmart, whose shares sell for 19 times trailing earnings and 17 times expected earnings.   

The stock yield still isn’t much — 1.7 percent. But only a little more than 30 percent of TJX’s earnings are paid out as dividends. So the payout is safe, and has room to grow.

Maybe even another 20 percent next year.

Disclosure: I do not at present own shares of TJX.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s