Income investors seek a steady stream of dividends. Columbia Sportswear’s dividend history is long and it might make a great addition to an income portfolio. Let’s take a look at the business, dividend history, and payout safety going forward.
Business Overview and Highlights
Columbia Sportswear (NSDQ:COLM) is a $6.5 billion business. The company Portland, Oregon based company manufactures and distributes outerwear, sportswear, footwear, and camping equipment. The company employs 6,200 people. Last year Columbia Sportswear pulled in $2.8 billion in sales and that works out to $453,000 per employee.
Columbia Sportswear has experienced rapid sales growth over the last decade. The company markets its activewear to “keep people warm, dry, cool, and protected so that they can enjoy the outdoors longer.” Long-term shareholders can relate, because Columbia Sportswear has protected them from the market’s volatile climate. The stock has outperformed both the S&P 500 and the SPDR S&P Retail ETF over the last 10 years.
On April 19, 2019, the company’s board of directors announced a quarterly dividend of $0.24 per share. The cash dividend was made payable on May 30 to shareholders of record on May 16.
Columbia Sportswear’s 10-Year Dividend History
The company paid investors $0.33 per share a decade ago. Over the last 10 years, the dividend has climbed to $0.90. That’s a 173% increase and you can see the annual changes below…
The compound annual growth is 10.6% over 10 years… but over the last year, the dividend climbed 23.3%. The increase in dividend growth is a good sign. In 2010 the company paid investors a special dividend of $1.50. Columbia Sportswear might work out as a great income investment. Let’s take a look at the yield…
Current Yield vs. 10-Year Average
Columbia Sportswear’s long history of paying dividends makes it one of the best dividend stocks around. This also makes the dividend yield a great indicator of value. A higher yield is generally better for buyers. Sustainability is also vital and we’ll look at that soon.
The dividend yield comes in at 0.98% and that’s below the 10-year average of 1.47%. The chart below shows the dividend yield over the last 10 years…
The lower yield shows that investors have bid up the company’s market value. They might be expecting higher growth and payouts. But more often than not, the dividend yield is mean reverting with share price changes.
Improved Dividend Safety Check
Many investors look at the payout ratio to determine dividend safety. They look at the dividend per share divided by the net income per share. So, a payout ratio of 60% would mean that every $1 Columbia Sportswear earns, it pays investors $0.60.
The payout ratio is a good indicator of dividend safety… but accountants manipulate net income. They adjust for goodwill and other non-cash items. A better metric is free cash flow.
The ratio is pretty steady over the last 10 years. The last year shows a payout ratio of 28%. This means Columbia Sportswear’s earnings are high enough for the board of directors to continue paying the current dividend, or even raise it.
If you’re interested in seeing more dividend research, please comment below. You can also check out our free DRIP calculator. With it, you can uncover the power of dividend reinvestment growth.
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Good investing,
Robert
