DSW Inc (NYSE:DSW): Ex-Dividend Is In 9 Days, Should You Buy?

Investors who want to cash in on DSW Inc’s (NYSE:DSW) upcoming dividend of $0.25 per share have only 9 days left to buy the shares before its ex-dividend date, 20 June 2018, in time for dividends payable on the 05 July 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into DSW’s latest financial data to analyse its dividend attributes. See our latest analysis for DSW

Here’s how I find good dividend stocks

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

  • Is it the top 25% annual dividend yield payer?
  • Does it consistently pay out dividends without missing a payment of significantly cutting payout?
  • Has dividend per share amount increased over the past?
  • Is its earnings sufficient to payout dividend at the current rate?
  • Will the company be able to keep paying dividend based on the future earnings growth?

NYSE:DSW Historical Dividend Yield June 10th 18
NYSE:DSW Historical Dividend Yield June 10th 18

How does DSW fare?

The current trailing twelve-month payout ratio for DSW is 99.03%, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect DSW’s payout to fall into a more sustainable range of 52.37% of its earnings, which leads to a dividend yield of 3.61%. Furthermore, EPS should increase to $1.57, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view DSW as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, DSW generates a yield of 4.04%, which is high for Specialty Retail stocks but still below the market’s top dividend payers.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in DSW for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three relevant factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for DSW’s future growth? Take a look at our free research report of analyst consensus for DSW’s outlook.
  2. Valuation: What is DSW worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether DSW is currently mispriced by the market.
  3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.