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American Eagle (AEO) Cheers Shareholders With 31% Dividend Hike

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American Eagle Outfitters, Inc. (AEO - Free Report) is one of the companies, which have resumed dividend payments and offering strong shareholder returns. The specialty retailer of casual apparel, accessories and footwear for men and women boasts paying uninterrupted dividends since 2004. Notably, it hiked its quarterly cash dividend by 31% to 18 cents per share. The increased dividend will be paid out on Jul 23 to shareholders of record as of Jul 9, 2021.

Based on the share price of $33.40 on Jun 3, the annual dividend comes to 55 cents per share, resulting in an annualized yield of 1.6%. Notably, the company’s current dividend payout ratio is 46.2%. Notably, solid dividend payouts are the biggest enticement for investors and American Eagle remains committed to the same. In fiscal 2020, the company paid out dividends of $22.9 million to shareholders.

The move comes after its impressive first-quarter fiscal 2021 results, wherein revenues and earnings increased year over year. The company witnessed accelerated growth across both the American Eagle and Aerie brands in the reported quarter. Management was particularly impressed with the demand for Aerie’s products, which contributed to sales, margins and profitability in the reported quarter.

Speaking of the Aerie brand, sales surged 89% in the fiscal first quarter, marking its 26th successive quarter of double-digit growth. Apart from these, positive feedback for its latest activewear collection, namely OFFLINE, remains an upside. Going ahead, it aims to achieve $2 billion in Aerie sales.

Further, it has been gaining from strong digital demand and expanded delivery options, including same-day delivery. Moreover, lower rent expenses, reduced promotions and inventory-optimization efforts act as tailwinds. Also, management remains optimistic about its Real Power Real Growth value creation plan, which will help fuel growth across brands and channels along with aiding in customer acquisition.

We note that shares of this Zacks Rank #1 (Strong Buy) company have advanced 21.2% in the past three months compared with the industry’s and the Consumer Staples sector’s growth of 8.1% and 3.8%, respectively. Further, the stock is hovering close to its new 52-week high of $38.28.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

Summing Up

We believe that sound fundamentals demonstrate the company’s operational strength and high-quality portfolio. It draws further investor attention through its regular dividend payouts and commitment to enhance shareholder returns. The stock has a VGM Score of A.

Other Stocks in the Retail Space

DICK’S Sporting Goods (DKS - Free Report) currently sports a Zacks Rank #1 and has a long-term earnings growth rate of 7.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie & Fitch Company (ANF - Free Report) has a long-term earnings growth rate of 18% and it presently flaunts a Zacks Rank #1.

Tapestry (TPR - Free Report) , with a Zacks Rank #2 (Buy), has an expected long-term earnings growth rate of 10%.

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