I 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!