Investing In Infant’s And Children’s Clothing Dividend Stocks
With baby DivHut being born last March I seem to have taken an interest in featuring his own dividend growth portfolio along with other baby related posts this month. Last week I wrote a blog post describing various dividend paying baby formula stocks that exist and now I’d like to do an overview, from a dividend perspective of course, of the $9 billion infant’s and children’s clothing industry in the U.S. With many major players in the space like Toys ‘R Us and Gymboree, the sector is expected to grow to $173.6 billion by 2017 globally. By any measure, that’s a huge market. With that being said, let’s take a look at some of the dividend paying companies that operate within this sector.
First up is a name that is present in virtually all homes with infants and toddlers, Carter’s, Inc. (CRI). Makers of bodysuits, pants, dresses, receiving blankets, caps, bibs, booties and much, much more sold under its namesake as well as familiar brands such as Precious Firsts, OshKosh and others, it’s a name that is very familiar with any parent with young children. Currently yielding a relatively low 1.30%with an equally low payout ratio of 26.1%, CRI offers a safe dividend with room for future growth based on current cash flow. While it doesn’t have a long history paying dividends it has been growing its distribution by double digits averaging an impressive 15.8% over the last couple of years. From a simple PE perspective, CRI has a multiple of 22.4 which is in line with its five year average PE sitting at 22.5. Forward PE looks more enticing at 17.9.
Next up is children’s specialty apparel retailer, The Children’s Place, Inc. (PLCE). Operating well over 1,000 stores across North America, PLCE sells merchandise under The Children’s Place, Place, and Baby Place brand names. Perhaps a PLCE store is in your neighborhood? With a low current yield of just 1.00% and a low payout ratio of 19.8%, PLCE like CRI, sports a safe dividend based on current cash flow with room for future growth. With a short dividend distribution history beginning in 2014, it’s difficult to estimate dividend growth rates going forward with any accuracy though I would venture to guess double digit increases going forward. Again, it’s just a guess. Looking at its PE, the stock sports a multiple of 28.9 well above its five year average of 19.8. Forward PE comes back down to earth at 19.4.
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