3/8/25
Dillard’s, Inc. (NYSE: DDS) has been a household name in the department store world for decades. With its deep roots in the South, Southeast, and Midwest, the company has built a reputation for offering a blend of private-label and national-brand apparel, accessories, and home goods.
Retail has changed dramatically over the years, but Dillard’s has remained a steady player. Investors often look at the stock for its financial discipline, share repurchase strategy, and profitability. But what about its dividends? For income-focused investors, Dillard’s dividend story is a bit unconventional.
📌 Key Dividend Metrics
💰 Dividend Yield: 0.28%
📈 5-Year Average Yield: 0.54%
📅 Next Dividend Date: May 5, 2025
🔄 Ex-Dividend Date: March 31, 2025
💵 Annual Dividend Payout: $1.00 per share
📊 Payout Ratio: 2.72%
🚀 Dividend Growth Rate: Minimal
Dividend Overview
For those focused on income, Dillard’s isn’t exactly a standout. A 0.28% dividend yield is far below what many dividend-focused investors seek, especially when the S&P 500’s average yield is much higher. If the goal is to generate steady cash flow from dividends, there are better options.
That said, the company’s payout ratio is incredibly low at just 2.72%. In simple terms, Dillard’s could afford to significantly increase its dividend without putting any stress on its financials. But historically, the company has chosen to return capital to shareholders through stock buybacks rather than dividend hikes.
If you’re looking for immediate income, Dillard’s probably isn’t your best bet. But if you’re open to a total return strategy that combines stock appreciation with a modest dividend, it could still have appeal.
Dividend Growth and Safety
Dillard’s has paid dividends for years, but it hasn’t consistently increased them. The company has occasionally issued special dividends, but regular increases haven’t been a priority.
Is the Dividend Secure?
- The payout ratio is extremely low, meaning the dividend is well covered by earnings.
- The company generates strong cash flow, with operating cash flow at $714.1 million and free cash flow at $471.9 million. The dividend payout is a small fraction of this, so there’s no risk of a cut.
- Debt levels are manageable, with a total debt-to-equity ratio of 30.92%. The company isn’t carrying excessive leverage, which adds another layer of safety.
Dillard’s has no problem maintaining its dividend, but don’t expect rapid growth in payouts anytime soon.
Chart Analysis
Price Action and Trend
Dillard’s (DDS) stock has had a volatile ride over the past year, with clear periods of strength followed by sharp declines. The stock recently hit a high above $500 before experiencing a steep pullback, now settling around $371.32. The drop took the price below the 50-day moving average, which had been trending upward for months, signaling a break in momentum.
The 200-day moving average remains steady and has not yet turned downward, but the price is now testing levels close to that longer-term trendline. This suggests that the stock is at a key technical point where it either finds support or risks further downside.
Moving Averages
The 50-day moving average had been acting as support for much of the uptrend, but the recent sell-off broke through that level decisively. The 200-day moving average, which typically signals long-term strength or weakness, is sitting lower, and the stock is nearing it again. If it fails to hold above that level, it could indicate a shift from an uptrend into a more prolonged correction.
On the other hand, if buyers step in at current levels and push the price back above the 50-day moving average, it could indicate a rebound attempt. The stock’s ability to reclaim lost ground in the coming days will be an important factor to watch.
Volume and Market Participation
Volume has been elevated during the recent decline, with several days of above-average selling pressure. This indicates that the pullback wasn’t just a slow fade but rather a sharp move with conviction from sellers.
There have also been pockets of strong buying interest, as seen in a few of the green volume spikes. However, sustained buying would be needed to counteract the recent heavy selling and stabilize the price.
Relative Strength Index (RSI)
The RSI has pulled back significantly from overbought conditions, now sitting around 48. This means the stock is in neutral territory, neither overbought nor oversold. If the RSI dips below 30, it would suggest the stock is becoming oversold, which could bring in buyers looking for a discount.
If the RSI starts climbing back above 50, it would indicate that bullish momentum is returning, potentially signaling a reversal in the stock’s short-term direction.
Support and Resistance Levels
The stock has found some temporary support around the $370 level, but if that doesn’t hold, the next significant support area could be around $350. Below that, there isn’t much strong technical support until the $320 level, which marked a prior low.
On the upside, if the stock can reclaim the 50-day moving average, currently near $450, it could regain momentum toward recent highs. However, breaking back above that level would likely require a shift in sentiment and stronger buying interest.
Analyst Ratings
🟢 Dillard’s Inc. (NYSE: DDS) has recently received mixed analyst ratings, with some firms raising their expectations while others remain cautious. The stock has seen both upgrades and downgrades as analysts assess its financial performance, market position, and long-term growth potential.
Recent Upgrades
📈 In late 2024, Telsey Advisory Group increased its price target for Dillard’s from $380 to $450 while maintaining a “market perform” rating. The upgrade was driven by the company’s strong profitability, disciplined inventory management, and ability to generate consistent cash flow. Analysts also pointed to the resilience of the brand in a challenging retail environment.
📈 Another upgrade came from a regional investment firm that cited improving operating margins and the company’s ability to return capital to shareholders through stock buybacks and dividends. While Dillard’s may not be a high-growth retail stock, its financial stability and cost control efforts have impressed some market watchers.
Recent Downgrades
🔻 On the flip side, UBS Group reiterated a “sell” rating on the stock and lowered its price target to $202. Analysts expressed concerns about slowing revenue growth and the potential for margin compression as consumer spending patterns shift. The firm also highlighted the competitive pressures in the department store sector, which could weigh on future profitability.
🔻 StockNews.com recently downgraded Dillard’s to a “hold” rating, reflecting uncertainty about the company’s ability to sustain its current earnings levels. While the stock has performed well in recent months, some analysts believe it could face headwinds if consumer sentiment weakens or retail demand softens.
Consensus Price Target
📊 The average analyst price target for Dillard’s currently stands at $321.67, suggesting a possible downside from its recent trading levels. While some analysts remain optimistic about the company’s financial strength, others are more cautious given the broader retail industry challenges and potential economic headwinds.
The varying opinions reflect the ongoing debate about Dillard’s long-term prospects—some see it as a steady, well-managed retailer, while others worry about slowing sales growth and competition.
Earnings Report Summary
Dillard’s latest earnings report was a mix of solid numbers and a few areas that raised some eyebrows. The company managed to hold steady on sales, but profitability took a bit of a hit.
Sales and Revenue
For the quarter ending in late January, Dillard’s brought in $2.13 billion in net sales, just a slight bump from the $2.11 billion it reported in the same period last year. While growth is always good, this small increase suggests that the company isn’t exactly racing ahead but rather holding its ground in a competitive retail space.
Same-Store Sales
When looking at stores open for at least a year, sales didn’t really budge compared to the prior year. That’s not necessarily a bad thing, but it does mean that Dillard’s wasn’t able to squeeze out extra sales growth from its existing locations, which is something investors like to see.
Profits and Earnings Per Share
Net income for the quarter came in at $289.2 million, down from $321.2 million a year ago. Even though overall profits dipped, earnings per share still managed to tick higher to $16.89, up from $16.61. This bump in EPS is largely due to share buybacks, which reduce the number of outstanding shares, making each remaining share a bit more valuable.
Margins and Expenses
Dillard’s gross margin came in at 38.7%, a noticeable drop from 41.4% last year. This signals that the company either had to discount more heavily or faced higher costs that it couldn’t pass along to customers. Meanwhile, operating expenses rose slightly, now making up 21.6% of total sales, compared to 20.9% the year before.
Stock Buybacks
One of the highlights of the report was Dillard’s ongoing share repurchase program. Over the past year, the company bought back 1.7 million shares at an average price of $255.49 per share, spending a total of $436.6 million. There’s still $175.4 million left in the buyback program, which means investors could see even more reductions in share count moving forward.
Inventory and Outlook
Inventory levels crept up 8% from the previous year. That could mean the company is gearing up for stronger sales ahead, or it might indicate some risk of overstocking if demand softens. Managing this balance will be key in the coming quarters.
Dillard’s remains a solid, well-managed company, but this earnings report shows that it’s not without challenges. While buybacks helped support the stock, lower margins and rising costs could be areas to watch in the future.
Financial Health and Stability
Dillard’s financials are solid, but the business has faced some revenue challenges recently.
Profitability Metrics
- Net Profit Margin: 9.01%
- Operating Margin: 11.68%
- Return on Assets: 13.26%
- Return on Equity: 33.98%
These numbers show that Dillard’s runs an efficient operation with strong profitability.
Balance Sheet Strength
- Total Cash: $1.04 billion
- Total Debt: $555.3 million
- Debt-to-Equity Ratio: 30.92%
- Book Value Per Share: $112.94
With more cash than debt, Dillard’s is in a solid financial position. The company doesn’t rely heavily on borrowing, which gives it flexibility during downturns and allows it to make strategic moves when needed.
Valuation and Stock Performance
Dillard’s stock has been volatile, trading between $328 and $510 over the past year. At its current price of $371.32, it’s sitting closer to the lower end of that range.
Valuation Metrics
- Price-to-Earnings (P/E): 9.79 (relatively cheap)
- Forward P/E: 14.99 (higher, suggesting earnings are expected to decline)
- Price-to-Sales: 0.88 (low, meaning the stock isn’t expensive based on revenue)
- Price-to-Book: 3.18 (reasonable given the company’s financial strength)
Revenue has declined 5% year-over-year, and earnings are down 14.4%. These numbers explain why the stock isn’t commanding a premium valuation. Investors seem to be pricing in a slowdown in growth.
Stock Buybacks vs. Dividends
Dillard’s has aggressively repurchased shares, which has helped push up earnings per share over time. The company’s float is just 7.64 million shares, with insiders holding 32.43%. This signals that management is confident in the business and sees value in reducing share count.
From a shareholder return perspective, stock buybacks have been prioritized over dividend increases. This approach has worked well for long-term investors, but it’s not ideal for those who prefer predictable, rising income.
Risks and Considerations
While Dillard’s is financially strong, it’s not without risks.
- Revenue Decline – The company’s sales have been slipping, with a 5% year-over-year decline in the most recent quarter.
- Consumer Spending Sensitivity – As a department store, Dillard’s is highly dependent on consumer confidence and discretionary spending. Any economic slowdown could impact revenue further.
- Dividend Growth is Limited – If you’re looking for an income stock with consistent dividend increases, this isn’t it. Management prefers share buybacks.
- Stock Volatility – With a beta of 0.93, the stock moves closely with the overall market, but it has seen big price swings over the past year.
Final Thoughts
For a pure income investor, Dillard’s isn’t the most exciting dividend stock. The yield is low, and dividend growth has been limited. However, the company is financially strong, profitable, and committed to shareholder returns—just more through buybacks than dividends.
If you’re an investor who values capital appreciation with a small dividend bonus, Dillard’s might be worth considering. But if you’re after a steady and growing income stream, there are better choices elsewhere.
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