Despite gloomy predictions of its demise due to competition from online retailers, Best Buy Co., Inc. (NYSE:BBY) just announced a 32% quarterly dividend boost that yields 2.4% and accompanies a double-digit-percentage one-year asset appreciation.
In addition to the robust performance by its dividend and its share price over the past year, Best Buy rewarded its investors with longer-term performance as well by hiking its annual dividend payout for the past 15 consecutive years and offering triple-digit-percentage total returns over the past three and five years.
The company’s next ex-dividend date will be on March 21, 2018, and the company will distribute the next quarterly dividend to its shareholders on the next pay date, which is set for just three weeks later, on April 12, 2018.
Founded in 1966 as the Sound of Music, Inc. and headquartered in Richfield, Minnesota, Best Buy Co., Inc. (NYSE:BBY) operates as a retailer of technology products, services and solutions in the United States, Canada and Mexico through two business segments – Domestic and International. The company offers consumer electronics, computing devices and peripherals, mobile phones and accessories, entertainment systems and appliances. Additionally, the company provides consultation, design, delivery, installation, repair, technical support and educational services through its Geek Squad brand. The company offers its products through 1,200 large-format stores, 400 small-format stores and automated kiosks, as well as several websites. Some of Best Buy’s large-format stores contain areas that display high-end kitchen appliances and home theater equipment under the Pacific Kitchen and Home, and Magnolia Home Theater brand names.
The company’s upcoming quarterly dividend payout of $0.45 is 32.4% higher than the company’s $0.34 distribution from the previous quarter. This new quarterly amount is equivalent to a $1.80 annual payout and the current yield is 2.4%. While currently 12% below the company’s 2.8% average yield over the past five years, the current yield has been suppressed by the extraordinary share price rise over the past 12 months. Against the share price from one year ago, the company’s current annualized dividend would yield more than 4%.
However, even the current 2.4% yield outperforms the 2% simple average yield of the entire Services sector by 23.5% and is on par with the average yield of all the companies in the Specialty Retailers market segment.
The company has been distributing dividend income to its shareholders since 2003 and has boosted its annual dividend amount for the past 15 consecutive years. Over that period, the company managed to average a 15.8% annual dividend growth rate and multiplied its total annual dividend amount nine-fold since 2003.
In conjunction with the steady dividend growth, the company’s share price rose to provide double- and triple-digit-percentage total returns over the past several years. The share price dipped 1.7% at the onset of the trailing 12 months and reached its 52-week low on March 21, 2017. After the March bottom, the share price rose more than 77% with very little volatility towards its 52-week high of $78.06 by January 22, 2018. However, the share price pulled back almost 13% by February 5, 2018, before reversing direction and resuming its uptrend. However, the share price recovered 57% of those losses and closed on March 6, 2018 at $73.61, which was 5.7% short of the late-January peak. Additionally, the $73.61 closing price was 64.2% higher than it was one year earlier, 67% above the 52-week low from March 2017 and 243% above its level from five years earlier.
The combination of robust asset appreciation and stable dividend income growth rewarded the company’s shareholders with a total return of nearly 80% over the past 12 months. Additionally, shareholders received a 105% total return for the past three years and an extraordinary 343% total return over the past five years.