Electronics retailer RadioShack (RSH), one of 10 Retail Stock Losers of 2011, has been slumping for quite some time, as sales are actually lower than they were back in 2002. Yet even without any signs of sales improvements, RadioShack has still tossed off lots of profits. Operating cash flow has been above $300 million for each of the last five years.
The current annual payout of 50 cents was hiked this fall from 25 cents, where it stood for eight straight years, securing RadioShack's spot as one of the highest-yielding retail stocks. Still, the company also has enough money left over to maintain a longstanding stock buyback program as well. Shares outstanding have fallen for eight straight years, from 173 million back in 2002 to a recent 100 million.Yet this retailer has seen sales drop even further in recent months. As a result, the company earned just 11 cents to 13 cents in the fourth quarter, well below the 37 cents a share that analysts had been expecting. Shares were crushed down to around $7, a level not seen since the early 1990's. >>6 Stocks Reaping the Benefits of Big Buybacks The question for investors: What does the quarterly shortfall mean for the dividends and the buybacks? It's worth tracking what management has to say about the topic. If the dividend will be maintained at current levels, then the effective yield is now a hefty 6.9%. Management may choose to cut the dividend and focus on the buybacks. Either way, this is shaping up to be an intriguing value play, and you can look for rumors to resurface that the board will look to sell the company or take it private.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV