The TJX Companies Inc. (TJX) announced that its board of directors has approved a 21% hike to its regular quarterly dividend. This is the 16th consecutive year for which the company hiked its quarterly dividend.
TJX will now pay 11.5 cents per share of dividend to its shareholders compared to 9.5 cents paid earlier. The increased dividend will be paid on May 31, 2012, to shareholders of record as of May 10, 2012.
The increased dividend reflects the company’s sound financial position. Signs of recovery in the economy have made share buybacks and dividend increases a common factor among companies, who are sitting on ample cash. Apart from enhancing shareholders’ return, such a strategy lifts the market value of the stock.
Earlier this year in January, TJX had announced a two-for-one stock split of the company’s common stock in the form of a stock dividend. Management said that the stock split was on the back of better-than-expected same-store sales in December 2011.
TJX recently reported adjusted earnings of 62 cents per share for the fourth quarter ended January 28, 2012. Although earnings were in line with the Zacks Consensus Estimate, they were up 17% from the year-ago level. The growth was fueled by newer assortments of apparels that increased customer traffic in its stores.
Earnings for the 52-week fiscal year 2012 went up 14% year over year to $1.99 per share. Fiscal 2012 results were in line with the Zacks Consensus Estimate. The earnings also exceeded management guidance of $1.19 – $1.23.
TJX exited the quarter with cash and cash equivalents of $1,507.1 million, compared with $1,741.8 million in the year-ago period. During the reported quarter, the company repurchased 12.5 million shares (adjusted for the two-for-one stock split) at a cost of $402 million. For the full year, the company repurchased 49.7 million shares (adjusted for the two-for-one stock split) at a cost of $1.4 billion.
TJX expects to repurchase approximately $1.2 billion to $1.3 billion of TJX stock in fiscal 2013.
Framingham, Mass-based TJX Companies Inc. is an off-price global retailer of apparel and home fashions. The company operates 2,906 stores in the U.S., Canada and Europe. Stiff competition from Kohl’s Corporation (KSS) and Target Corporation (TGT) coupled with slow recovery of the U.S. economy are matters of concern.
Currently TJX holds a Zacks #2 Rank, implying a short-term Buy rating. On a long-term basis, we maintain a Neutral recommendation.
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