The last year has been stellar for department store giant Macy's (M - Get Report). Shares of the $14.7 billion firm have rallied more than 50% in the last 12 months, buoyed by strong sales and the ability to execute on its growth strategy -- a rarity in retail lately.
Management decided to build on that success this week by doubling the firm's quarterly dividend payout to 20 cents per share. For those keeping score, that's the second time Macy's has doubled its dividend in the last year.Besides its eponymous stores, Macy's owns Bloomingdales as well as online commerce sites for both of those brick-and-mortar chains. While those online properties offer little in the way of an economic moat, the legacy department store business actually does look attractive right now. Macy's has been adept at pushing through a new, more customized merchandising strategy, fitting the products on shelves more to a particular store's demographics. That's helped draw customers into department stores, something peers have been struggling to do lately. While retail is generally a capital-intensive business, Macy's balance sheet looks fairly strong. The firm's debt load is reasonable, and it's got ample cash on hand. That cash cushion should help to smooth out the company's increased dividend payout going forward. Macy's is one of the top holdings of David Tepper's Appaloosa Management, comprising 5.6% of the total portfolio as of the most recently reported quarter.