When it comes to discounting, I think discounting dividends is the best way of doing it.
Maybe in general this works, but I think it is management and that is difficult to quantify. Most everybody I discuss KSS with says their dividend will be cut and/or eliminated. KSS has continued to pay it's 10% dividend especially as it is at/near an all time low, revenues have been falling, and last 2 years there has been an interim CEO. So will the new CEO coming in in 2025, cut their dividend and/or eliminate it? If that occurs, then will the stock move higher because of higher FCF? I doubt it.
So now check out Dillard's (DDS). How can this retailer be +over 540% from 2020? Annual FCF positive every year from 2015. Revenues/Sales pretty much flat since 2015,
Shareholder Returns:
The company has been proactive in returning value to shareholders through share repurchases and dividends. In 2023 alone, Dillard's returned $620 million to shareholders while maintaining a robust balance sheet 6
. Such actions not only reflect confidence in future profitability but also help support stock prices even during periods of revenue stagnation. - 2021: Dillard's repurchased approximately 1.3 million shares. (7% of total shares)
- 2022: The company increased its buybacks, acquiring around 1.7 million shares. (9.8% of total shares)
- 2023: Dillard's bought back about 900,000 shares, totaling approximately $281.4 million in repurchases. (5.8% of total shares)
Dillard's ongoing share repurchase programs demonstrate its strategy to boost shareholder value and manage equity effectively amidst fluctuating market conditions. The latest program announced in May 2023 allows for up to $500 million in additional buybacks, indicating continued confidence in its financial position and future prospects 1 2 3. So management's dedication to buy back shares over the last 4 years has significantly benefited the shareholders (and employees) resulting in a more than +543% increase in the stock price since 2020! |
