Acquisition BKE

Buckle-Company-LogoI took a different approach for this recent acquisition and decided to buy The Buckle, Inc. (BKE). I usually only buy companies that have sustainable long-term dividend growth models, but for this company I made a special exception. I noticed something very unique about it that would return my investment back to me just like any other dividend growth company. While, it doesn’t have the consecutive years of stable dividend growth history, it does have a history of paying special dividends for the last 7 years straight!

This is very interesting to me because there is not a lot of quality companies that do this sort of thing consecutively. The way I see it is that this company is shareholder friendly, but with a different twist. Rather than raising quarterly dividend every single year, the company is calculating a lump sum of annual earning to pay to the shareholders. So you see, you still receive quarterly dividends plus the annual special dividend that sometimes largely exceeds the total returns from the quarterly dividends. The true power I see with this company is perhaps quicker way of recovering my original investment back in the form of dividends. Now, I am not predicting the future and there is always a chance the company could not pay the special dividend, but the probability is high towards receiving it just due to the track record it already has. I did some calculations to estimate the future special dividend and I came to an average of $2.43 per share, from the last seven years it has been paying. The return comes out towards 7% back to shareholder just on the basis of special dividend alone. I definitely see some potential here as well as some possible risks.

The Buckle Inc. was founded in 1948 and is headquartered in Kearney, Nebraska. The company operates as a retailer of brand name and casual apparel, footwear, and accessories for men and woman in the United States. The Company emphasizes personalized attention to its customers and provides customer services such as free hemming, free gift-wrapping, easy layaways, the Buckle private label credit card, and a frequent shopper program. The company mostly operates its stores under the names of Buckle, while also selling their product through the company’s online website. Most stores are located in regional, high-traffic shopping malls and lifestyle centers. As of March, 2015 the company is operating 462 retail stores in 44 states around the country.

  • Dividend Yield: 2.7%
  • 3 Year Dividend Growth Rate: 3.2%
  • Payout Ratio: 28.5%
  • P/E: 10.5
  • Consecutive Years of Dividend Raises: 0

I purchased 30 shares of BKE for the price of $34.40 adding $27.60 to my annual dividend income.

This is the 11th time I am initiating a stock acquisition this year. This transaction is my initial purchase of BKE into the portfolio. Furthermore, the acquisition of BKE makes it the 34th company I am invested in. Currently, BKE ownership stake represents to be around 1.5% of my current portfolio value.

The 12-month dividend income increased to $2,506.

Thank you for reading & have a great day!

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10 Comments

  1. Mike A on November 5, 2015 at 16:08

    Interesting, Never heard of the company but will take a look. Thanks for the tip. ORIT is another one with a 3-year streak of special dividends. Its on my watch list for a while. Yield is >4%, but with the special dividend the past three years have been over 7%.

    • DividendVet on November 5, 2015 at 18:09

      Glad you found some value.

      Take care.

  2. JC @ Passive-Income-Pursuit on November 5, 2015 at 18:48

    Interesting purchase. TROW does a combination of both consistent dividend increases as well as special dividends from time to time. Although it’s not consistent enough to rely on each year. I think BEN is another one that likes to do special dividends as well. It’s an interesting idea and kind of makes them more like the European companies that pay dividends that fluctuate more as earnings rise and fall. Those special dividend returns are pretty juicy for BKE so far. Hope that continues going forward.

    • DividendVet on November 6, 2015 at 14:37

      Very interesting indeed, COST also does a special dividend time to time. There is a bunch out there that pay dividends, plus special dividends on top, but I haven’t seen any businesses with such a historical consecutive streak as BKE. I thought I would test out some waters with this one, either way it is paying 2.7% regular dividend.

      Thanks for your thoughts.

  3. FerdiS on November 10, 2015 at 01:45

    Interesting — turning a regular quarterly dividend into something really special through a special dividend is a smart way of returning value to shareholders, yet not overcommit along the way.

    Congratulations and keep up the good work!

    • DividendVet on November 10, 2015 at 22:32

      I thought so myself, very unique history for rewarding their shareholders and with their low payout ratio they are definitely not over extending themselves for the future. Lets hope it continues.

      You keep fighting the good fight yourself!

  4. The Dividend SWAN on November 17, 2015 at 20:28

    Dividend Vet,

    I bought BKE almost $1 higher than you. Didn’t realize you bought it until AFFJ commented on my page. I have been watching it also and attracted to the special dividend. Another one not mentioned here that does this pretty consistently is RLI. They just announced a $2.00 special dividend for December.

    MAIN and SBSI also do some special payouts sometimes.

    • DividendVet on November 17, 2015 at 21:38

      Sweet, good to hear we are both on the same page on the outlook for this company. I usually stick to DG stocks, but I had to make an exception for BKE and just to test things out. We will see how it goes and hope to get juicy cherries on my cake in the form of special dividends.

      Yeah, just put RLI into my special dividends watch list, though I am not going to pull a tricker on this one.

      Thanks for your special dividend insides, I greatly appreciate it!

  5. Investment Hunting on November 22, 2015 at 11:56

    Interesting approach. My kids shop at Buckle all the time and whenever I’m there it’s very busy. After reviewing BKE, I’ve joined you and Dividend Swan by picking up 80 shares. There are a handful of companies out there who pay annual special dividends. I’ve been looking at Wynn Resorts for example. The stock has paid a special dividend 7 of the 8 last years. Wynn stock is down 60% YTD due to Macau gaming concerns, so the stock is getting close to my buy price.

    • DividendVet on November 22, 2015 at 19:02

      Glad to have you as a fellow shareholder. Yeah, I think the company has really good brand awareness with the younger crowd. Buckle is quite cool! 🙂

      I’ll have to take a look at WYNN closer.

      Thanks for contributing on the topic.

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