How Sustainable Is Macy’s 9.4% Dividend Yield?
Macy's (NYSE: M) shares are down 46.26% year to date and the price plunge raised its dividend yield to 9.42%. Since the dividend yield is derived by taking the dividend per share and dividing it by the price per share, the increase was not management's choice, but due to the decline in the stock price. The high yield during a challenging environment for the company puts the question to management if it would be prudent to reduce the dividend, which the company has spent an annual $460 million paying, for the last three years.
In its latest quarterly earnings release, Macy's experienced a decline in comparable-store sales of 3.5% and management lowered its guidance for the year's earnings per share to a midpoint of $2.67, down from a midpoint of $2.95. It attributed the sales and earnings drop to mismatched inventory, and the need to make significant changes to its website to be ready for the holiday quarter.
Source: Macy's
Source Fool.com
