| | | Re: Dollar General (DG) ...
On the technology front, Dollar General’s mobile app continues to grow in popularity. The firm ended the fiscal second quarter with 4 million monthly active users using its app, up 28% year over year. Dollar General’s data driven marketing platform, DG Media Network, was launched back in 2018 and continues to appeal to the retailer’s key brand partners according to recent management commentary.
The company is also steadily rolling out self-checkout options at its stores which were available in roughly 4,300 stores by the end of last quarter. By the end of fiscal 2022, Dollar General aims to have self-checkout options available across the “vast majority” of its store base. Self-checkout options are part of Dollar General’s ‘Fast Track’ initiative which aims to “[increase] labor productivity in (its) stores, enhancing customer convenience, and further improving on-shelf availability.”
Additionally, Dollar General notes this initiative aims to “[optimize] (its) rolltainers in case of pack sizes, resulting in the more efficient stocking of (its) stores.” Self-checkout options “provide customers with another flexible and convenient checkout solution, while also driving greater efficiencies for (its) store associates” according to recent management commentary.
We appreciate management’s detailed update on Dollar General’s various initiatives during the company’s latest earnings call, as these endeavors will play a key role in supporting the firm’s sales growth and margin expansion potential in the coming years. Ultimately, these initiatives will play a leading role in enabling the discount retailer to remain competitive in the hypercompetitive retail landscape and support its free cash flow growth trajectory over the long haul. Dollar General is spending a significant amount on these efforts via incremental SG&A expenses and meaningful capital expenditures, and we are big fans of these endeavors.
Concluding Thoughts:
Dollar General is one of our favorite retailers out there. The company’s recent performance is contending with the banner year that Dollar General put up in fiscal 2020, making year-over-year comparisons noisy. We continue to view Dollar General’s free cash flow growth outlook quite favorably, aided by the various initiatives mentioned above. After bulking up its inventories, Dollar General is ready for the back-to-school and holiday shopping season. We continue to view the discount retailer’s capital appreciation upside quite favorably, and Dollar General’s dividend offers incremental upside here as well. Shares of DG yield a modest ~0.8% as of this writing.
Source: Valuentum (DG ... A top growth pick in their portfolio)
DG has a low yield but very strong dividend growth. The latest dividend increase was 17%. The 5 year dividend growth rate is 10%. The 20 year dividend growth rate is 16%. So, it appears that DG is a strong and consistent double digit dividend growth company.
DG is held in both the Young Folk and Older Folk Portfolios. |
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