Retailers generally offer high margins and solid revenue growth, giving investors the opportunity to ride hot fashion trends. And even for ones that have matured, though growth may not be as strong as it once was, investors can get paid anyway.
Buying shares of dividend-paying companies in the retail sector, especially ones that have above-average yields, can help investors boast market-beating returns, with a caveat. Oftentimes, these companies are either in slow industries or may have seen their stock prices fall sharply, increasing the yield for the wrong reason.
Large companies with plenty of international exposure, including names like Abercrombie & Fitch (ANF) , L Brands (LB) and American Eagle (AEO) and others have high-dividend yields that investors should be aware of.
TheStreet has compiled a list of five high-yielding retailers.
Abercrombie & Fitch (ANF) has had its fair share of problems, but the company is still rewarding investors with a high dividend.
Sporting a 8.3% yield, the company caters towards cash conscious teens, but lately it has run into trouble, as companies like Amazon (AMZN) take more market share in clothing.
Earlier this week, Abercrombie said it would no longer pursue a sale of the company, stating, "After a comprehensive review of all relevant factors, with the assistance of our financial advisor, the A&F Board of Directors determined that the best path to enhance value for stockholders is the rigorous execution of our business plan."
Guess (GES) has suffered from revenue declines and additional concerns that Amazon is materially hurting its business.
Over the past 12 months, shares have fallen around 20%, even as revenue growth has remained positive. Guess has generated $2.2 billion in revenue over the past year, while generating $745 million in gross profit.
It sports a 7.6% dividend yield at current prices.
L Brands (LB) is home to Victoria's Secret and Bath & Body Works. Shares have fallen 35% over the past year, giving shares a 5.4% dividend yield.
Revenues have also fallen in the past year, as shoppers look elsewhere for their shopping needs. Quarterly revenue has declined 7% over the past year, with the company generating $12.4 billion in sales. It still generates a healthy profit though, earning $2.43 billion before interest, taxes, depreciation and amortization.
One of the country's leading footwear stores, DSW (DSW) too has come under pressure as shoppers increasingly turn toward the internet for their footwear needs.
Over the past year, shares of DSW have lost 27%, leaving the stock with a 4.7% yield.
Even though the stock has struggled, revenue is still going in the right direction, albeit barely. Revenue is growing at 1.4% year-over-year, with the Ohio-based DSW generating $2.7 billion in sales over the past 12 months.
EBITDA for the same time period was $263.39 million.
Like Abercrombie, American Eagle Outfitters (AEO) has too succumbed to the Amazon threat, as well as fickle teenage shoppers. However, it's in a better financial picture to weather the storm.
Over the past years, shares of American Eagle have fallen by nearly 30%, but its 4.5% dividend yield looks to be relatively stable, as revenue is growing, albeit at a clip of less than 2%. Over the past twelve months, it has generated more than $340 million in operating cash flow and it has a net cash position of $225 million, or $1.27 a share, enough to keep the dividend stable while it continues to turn the business around.