Key Takeaways
💸 Dividend yield is currently 2.5%, well above its 5-year average, with steady annual growth and a payout ratio around 46%, suggesting ongoing stability.
💰 Free cash flow hit $1.69 billion in the trailing twelve months, supported by nearly $3 billion in operating cash flow despite elevated capital expenditures.
📊 Analysts are split, with some downgrades citing margin concerns, while others see value at current levels; the consensus price target stands near $89.44.
📈 Revenue rose 4.5% in the latest quarter, but net income fell sharply due to store closure charges; leadership is refocusing on operational efficiency and core categories.
Last Update: 5/1/25
Dollar General (DG) operates more than 19,000 stores, catering to cost-conscious consumers in small towns and rural areas. Over the past year, the company has faced significant challenges, including a steep stock decline, margin pressure, and an operational reset under returning CEO Todd Vasos. Despite a drop in earnings, revenue continues to grow modestly, supported by steady customer traffic. The company is refocusing on core consumables, optimizing store performance, and tightening execution. With a 2.5% dividend yield, strong free cash flow, and a forward P/E ratio around 17, the valuation has reset, presenting a different investment profile than in recent years.
Recent Events
Over the last year, the stock has taken a noticeable hit. Shares are down nearly 32% from their 52-week peak of $147.87, and they’re currently hovering around $93.69. This underperformance is in sharp contrast to the broader market, which has climbed almost 10% over the same timeframe.
The root of the decline lies in weaker-than-expected earnings. Quarterly earnings growth dropped sharply, down more than 50% year-over-year. Rising costs—especially in logistics and labor—have squeezed margins and put pressure on profitability. Even so, the top line remains intact, with revenue climbing 4.5% year-over-year. That tells us customers are still coming through the doors; the challenge lies in controlling what happens behind the scenes.
Management hasn’t been idle. The leadership team is actively simplifying operations, refreshing underperforming stores, and refocusing on core product categories. These moves are aimed at regaining efficiency and restoring earnings power without compromising the company’s reliable sales engine.
Key Dividend Metrics
📈 Forward Yield: 2.52%
💰 Forward Annual Dividend: $2.36 per share
📆 Most Recent Dividend Date: April 22, 2025
⏳ Ex-Dividend Date: April 8, 2025
📊 Payout Ratio: 46.18%
📈 5-Year Average Dividend Yield: 1.32%
🔁 Dividend Growth History: Annual raises since 2015
🔐 Dividend Safety: Supported by strong free cash flow
Dividend Overview
There’s a lot to like about Dollar General from an income standpoint. The forward dividend yield of 2.52% is meaningfully higher than its five-year average, reflecting both a higher payout and a recent dip in the share price. For investors seeking income, that spread creates an appealing entry point.
The dividend itself is well-supported. At just over 46%, the payout ratio gives the company breathing room to grow the dividend even in a tougher earnings environment. That’s an important distinction—many higher-yielding companies are already pushing the limits of their cash flow. Dollar General still has room to maneuver.
Cash flow generation remains solid, even as net income took a step back. The company posted $3 billion in operating cash flow over the last twelve months and generated more than $1.3 billion in levered free cash flow. Those are the real dollars that fund dividends. And while capital expenditures are necessary to maintain and improve its footprint, DG still comes out with enough left over to keep rewarding shareholders.
Dividend Growth and Safety
What really stands out with Dollar General’s dividend is its consistency. Since initiating a regular dividend in 2015, the company has increased its payout annually. The growth isn’t flashy, but it’s steady—and that’s often exactly what long-term investors prefer. Incremental raises backed by stable performance can build a meaningful income stream over time.
The company’s 5-year dividend growth rate sits comfortably in the mid-single digits. That’s not going to double your income overnight, but it does keep pace with inflation and adds real value when compounded year after year. More importantly, the sustainability of that growth isn’t in question. Dollar General doesn’t rely on financial engineering to support its dividend. It’s backed by cash, not creative accounting.
On the safety side, the payout is well covered by both earnings and cash flow. Even with current challenges, the dividend doesn’t look at risk. The balance sheet does carry a fair amount of debt—over $17 billion—but that’s fairly typical for a mature retailer with a large physical footprint. The key is that the business continues to generate enough cash to service that debt and still return capital to shareholders.
For a dividend investor, that combination—moderate yield, consistent growth, and strong coverage—is worth attention. It may not grab headlines, but it does offer a level of predictability and durability that’s increasingly rare in today’s market.
Cash Flow Statement
Dollar General’s trailing twelve-month cash flow profile reflects a business that continues to generate strong internal cash, despite recent earnings pressure. Operating cash flow came in at nearly $3 billion, which marks a significant rebound from the $2.39 billion generated in the prior fiscal year. This renewed strength is largely a result of tighter working capital management and steadier sales volume, reinforcing the core health of the business even amid margin compression.
Capital expenditures remained elevated at just over $1.3 billion, in line with ongoing store openings and remodels. Despite that, Dollar General still managed to deliver $1.69 billion in free cash flow—a notable jump from the $691 million posted last year. On the financing side, the company used over $1.29 billion to reduce debt and manage its capital structure. While no new debt was issued, repayments totaled $770 million. Cash on hand improved to $932 million, reflecting both disciplined spending and better cash generation. This level of free cash flow gives DG solid footing to maintain its dividend and provides flexibility for strategic investments or further debt reduction.
Analyst Ratings
📉 Dollar General has recently been the subject of diverging analyst opinions, reflecting the uncertainty surrounding its near-term outlook and valuation. CFRA took a more cautious stance, downgrading the stock from Hold to Sell and assigning a price target of $75. This shift came as concerns grew around the company’s vulnerability to economic headwinds, particularly those affecting its core customer demographic—lower-income households. Analysts flagged the potential for soft same-store sales and anticipated that the company might need to sacrifice margins to stay competitive, especially as it increases spending on wages, pricing, and store upkeep.
📈 On a more optimistic note, Melius Research upgraded Dollar General from Hold to Buy, with a price target set at $110. Their view hinges on the belief that the current share price undervalues the company’s long-term potential. Melius sees recent operational changes, including a pivot back toward consumables and increased cost discipline, as positioning DG for a recovery. They argue the risk/reward dynamic has improved meaningfully at current levels.
📊 Citigroup also shifted its view, moving from a Sell to a Neutral rating while raising its price target to $101 from $69. The firm cited Dollar General’s relatively low tariff exposure and its heavy focus on consumables—areas that tend to hold up well during times of economic stress. With more consumers expected to trade down in 2025, DG could capture incremental market share, especially if it takes a page from Walmart and lifts prices modestly where it makes sense.
🎯 The consensus price target among analysts currently stands at approximately $89.44. While short-term risks remain, sentiment is gradually shifting toward cautious optimism, especially if the company continues to show progress in stabilizing operations and driving consistent traffic across its extensive store base.
Earning Report Summary
Slower Profit, But Sales Still Growing
Dollar General’s latest quarterly results paint a picture of a company dealing with some growing pains while still moving forward. Net sales hit $10.3 billion for the quarter, which was a 4.5% jump from the year before. That growth mostly came from new stores opening up across the country and a slight bump in same-store sales, which rose 1.2%.
Despite that top-line growth, the bottom line told a different story. Net income dropped more than half compared to the same quarter last year, falling to $191 million from over $400 million. Earnings per share also came in lower, at $0.87 versus $1.83 the year prior. Much of this decline was tied to a $232 million charge the company took related to closing underperforming stores as part of a broader review of its footprint.
Strategic Shifts and Store Closures
During the earnings call, CEO Todd Vasos explained that the decision to shut down 96 Dollar General stores and 45 pOpshelf locations wasn’t taken lightly. He framed it as a necessary step to tighten up operations and refocus the business where it’s strongest. The closures represent a small fraction of the total store base, but they signal a shift toward trimming inefficiencies and reinforcing the company’s core retail strategy.
There’s also a bit of a reset happening with pOpshelf. Six of those stores will be converted into regular Dollar General locations, which speaks to the company’s intent to lean more heavily into its strengths and simplify the model where needed.
Full-Year Picture and What’s Ahead
Zooming out to the full year, Dollar General brought in $40.6 billion in sales, up 5% from the year before. Same-store sales grew by 1.4%, and that was driven by both more foot traffic and a slight increase in what each customer spent.
However, earnings didn’t keep pace. Annual net income fell to $1.1 billion, a significant drop from $1.7 billion the prior year. Earnings per share followed the same trend, coming in at $5.11 compared to $7.55. The company spent the year juggling higher costs, store investments, and some operational hiccups that weighed on profitability.
Still, there’s a clear plan in place for 2025. Dollar General intends to open 725 new stores and remodel over 4,000 existing ones. Leadership is doubling down on operational improvements and sharpening its focus on the areas that deliver the most value. While the last year was bumpy, the company’s tone is one of renewal—refining its approach, tightening up the store base, and continuing to grow in a smarter, more deliberate way.
Chart Analysis
Trend Behavior and Moving Averages
DG has had a tough stretch, but the story showing up on the chart suggests some rebuilding is underway. The price experienced a long, steady downtrend that kicked off last summer, with the 50-day moving average (red line) sinking sharply and staying well below the 200-day moving average (blue line). That gap between the two widened dramatically into the fall, reflecting a market that had lost confidence. It bottomed out between October and December, where the price floated in the low $80s with limited volatility.
Now, things look a bit different. The stock has gradually clawed its way higher since early January. The 50-day moving average has turned upward and is now converging toward the 200-day average. That kind of setup often signals a potential shift in momentum. While it’s not a full reversal just yet, the recent crossover attempt shows that sentiment is slowly turning more constructive.
Volume and Relative Strength
Volume stayed quiet for most of the past year, except for a heavy spike in early September that likely coincided with a major news event or earnings miss. Since then, trading activity has remained moderate, but there’s a visible uptick in recent weeks that lines up with the price recovery. This tells us buyers are starting to re-engage, possibly seeing value at these levels.
Looking at the Relative Strength Index (RSI) on the bottom panel, the stock spent a good amount of time in a low momentum zone last year, even flirting with oversold levels in late fall. That dynamic has changed. Since March, RSI has been hovering near the overbought threshold without crossing it consistently, suggesting persistent buying strength but without the usual signs of exhaustion just yet. This balanced push higher adds credibility to the current price movement.
Big Picture Perspective
This is the type of chart that tells a story of damage, followed by stabilization. The selloff was long and deep, but recent months show a price that’s now holding up, drawing in volume, and recovering steadily. It hasn’t broken out, and there’s no runaway rally happening—but that might not be the goal. A slow, steady base with improving technical signals often sets the stage for more durable performance. DG isn’t out of the woods, but it appears to have stopped digging.
Management Team
Dollar General’s leadership is currently under the direction of Todd Vasos, who stepped back into the CEO role in late 2023 after previously leading the company for several successful years. His return wasn’t part of a long-term succession plan, but rather a response to performance issues that had started to build under his successor. Vasos brings a seasoned, operational mindset, focused less on high-level strategy and more on fixing execution. His reappointment signaled a shift back to fundamentals, with sharper attention paid to store operations, cost control, and product mix.
The broader executive team has also seen some adjustments. Dollar General brought in fresh operational leadership to stabilize field performance and support Vasos’ back-to-basics strategy. One of the clear themes from management in recent quarters has been the return to what works—emphasizing high-turnover consumables, prioritizing in-stock positions, and simplifying store-level execution. Rather than chasing store count targets, the current team is focused on improving what’s already there. This pivot reflects a more grounded approach and has started to restore some confidence in the company’s direction.
Valuation and Stock Performance
Dollar General’s share price has experienced a steep decline over the past year, falling from around $150 to the low $90s. The drop was fueled by disappointing earnings results, softer margins, and operational missteps. But in terms of valuation, the stock has reset to levels not seen in several years. Its forward price-to-earnings ratio now sits around 17, noticeably lower than its historical average. Investors are clearly pricing in a more muted growth outlook—but also leaving room for a potential rebound.
Other valuation metrics point to a similar narrative. The price-to-sales ratio is currently near 0.5, and the price-to-book value has contracted under 2.8. These are numbers more commonly associated with deep value stocks than retail names with long histories of expansion and reliable cash flow. The market has taken a cautious stance, but this kind of reset also opens the door for re-rating if the business finds its footing again.
On the performance side, the chart has stabilized in recent months. After bottoming near $66, the stock has made a slow but steady recovery. While it hasn’t returned to previous highs, the worst of the drawdown appears to be over for now. Dividend yield has also ticked up due to the lower share price, now sitting around 2.5 percent. With a payout ratio near 46 percent, the dividend remains sustainable and provides a cushion as the company works through its turnaround efforts.
Risks and Considerations
There are still significant risks to weigh. Dollar General’s customer base is especially vulnerable to shifts in the broader economy, particularly inflation and wage stagnation. Any pressure on disposable income hits sales directly. Though the company benefits when consumers trade down, that effect only goes so far if households are being squeezed across the board.
Operational consistency is another concern. The decision to bring Vasos back reflected broader issues with store-level performance and inventory management. While leadership is actively addressing those problems, execution risk remains. If initiatives fall short or customer service metrics slip further, the recovery could lose momentum quickly.
Debt is another important factor. With over $17 billion in debt on the balance sheet, the company doesn’t have unlimited flexibility. Debt service is manageable now, thanks to healthy cash flows, but any meaningful decline in earnings could make that leverage a greater burden. It limits what the company can do strategically, especially in terms of buybacks or large-scale initiatives.
There’s also the competitive landscape to think about. While Dollar General has a strong presence in rural and underserved markets, larger players like Walmart are continuing to innovate with smaller formats and improved logistics. Even Amazon is inching closer to DG’s space with low-cost delivery options and bulk pricing. The moat is still there—but it’s not as wide as it once was.
Final Thoughts
Dollar General has taken a hit, but it’s not broken. The business is still generating strong cash flow, its store model is deeply embedded in communities, and its dividend remains well-supported. What’s changed is the focus. Instead of relentless growth, the company is leaning into operational quality. That pivot may not deliver quick results, but it creates a healthier base over time.
The stock’s recent rebound suggests some investors are starting to see potential. It’s not a classic turnaround story yet—but the early signs are encouraging. With new leadership focus, a more reasonable valuation, and a steady stream of cash returns to shareholders, the groundwork is being laid for a more stable and deliberate path forward.
Dollar General isn’t trying to be flashy. It’s trying to get better. That shift in mindset, paired with disciplined execution, could be what ultimately drives long-term value from here.