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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.