Pet products retailer PetSmart (PETM), one of TheStreet Ratings' top-rated specialty retail stocks, has found success in its big-box pet store model. The company currently operates more than 1,000 stores that cater to the needs of Americans' pets, from pet food and toys to grooming and even veterinary services. A 12% dividend hike in PetSmart puts the company's current payout at 14 cents per share right now.
One of the most attractive aspects of PetSmart's business is its product mix. Because more than half of sales are generated by consumables, the company has a recurring revenue stream that's largely immune from recessionary pressures. While a minute portion of revenues comes from actual pet sales, those pets are a big driver of traffic into stores -- and more important, a driver of the firm's hard goods sales.PetSmart currently enjoys strong margins in the retail space, buoyed largely by its ability to effectively compete with peers who can't offer the same breadth of products and services in one location. With a strong balance sheet position in 2011, expect the firm's push for dividend payout increases to continue. PetSmart is one of the top-yielding specialty retail stocks.