Dividend Growth Stock Overview: Ross Stores

Ross Stores operates over 1200 discount apparel and 
accessories stores across the United States.
Photo courtesy Nicholas Eckhart/flickr.com.

About Ross Stores

Ross Stores operates the largest discount apparel and home fashion chain in the United States, with over 1200 Ross Dress for Less stores and 152 dd’s DISCOUNTS stores across 33 states, the District of Columbia and Guam.

Ross Stores was formed in August 1982, when 6 small department stores were acquired and converted to the Ross “Dress for Less” format. The company offered an initial public offering to investors in August 1985 to supply capital for its expansion. By the end of the 1980s, Ross had 156 stores in 15 states. By 1995, the company was operating 292 stores. The company continued to expand rapidly, with the quickest growth occurring in the 2000s. Ross also initiated the dd’s DISCOUNTS store format, with a selection of more moderately priced apparel and accessories in 2004. Ross opened its 1000th Dress for Less store in 2011 and its 100th dd’s DISCOUNTS store in 2012.

In fiscal year 2014, which ended January 31, 2015, Ross Stores earned $4.42 per share on revenues of $925 million. This was up from $3.88 per share and $837 million, an increase of 13.9% and 10.5%, respectively. For 2015, Ross estimates that it will earn between $4.60 and $4.80 per share, up 4.1% – 8.6% from 2014, and expects that same store sales will increase by 1 – 2%.

The company is a member of the S&P 500 index and S&P’s High Yield Dividend Aristocrats index, and trades under the ticker symbol ROP.

As a member of the S&P 500, once Ross Stores has increased dividends for 25 consecutive years S&P will classify the company as an S&P Dividend Aristocrat. Given that Ross has made a conscious effort to increase the dividend each year for 20 years straight, I expect them to continue to do so. This would put them on track to become a Dividend Aristocrat in 2019.

Ross Stores’ Dividend and Stock Split History

Ross Stores Dividend Growth

Ross Stores has nearly tripled its dividend since 2010.

Ross Stores has increased dividends since 1995. The company usually announces dividend increases when it reports results at the end of February. The stock goes ex-dividend for the increase in early March. In February 2015, Ross announced a 17.5% increase in its dividend to an annual rate of 94 cents per share. I expect Ross to announce its next dividend increase in February 2016.

Ross has one of the best dividend growth records among all dividend growth stocks, with double-digit percentage increases each year since 1995. Ross is one of only a few stocks that have doubled the dividend payout over the last 5 years, and one of only a handful of stocks that have doubled dividends every 5 years since beginning their record of dividend growth. In fact, the company has nearly tripled its dividend payout from 32 cents per share in 2010. I calculate Ross’ 5-year compounded annual dividend growth rate (CADGR) at 24.05%, its 10-year CADGR at 24.51% and its 20-year CADGR at 22.98%. This longer term dividend growth rate means that Ross has grown their dividends more than 60-fold since 1995.

Ross Stores has split its stock 2-for-1 four times in the last 20 years. These splits occurred in February 1997, September 1999, December 2003, and November 2011. You would now have 16 shares of Ross stock for each share of stock that you owned at the beginning of 1997.

Over the 5 years ending on December 31, 2014, Ross Stores’ stock appreciated at an annualized rate of 36.03%, from a split-adjusted $20.24 to $94.26. This dramatically outperformed both the 13.0% annualized return of the S&P 500 during this time.

Ross’ Direct Purchase and Dividend Reinvestment Plans

Ross Stores does not have a direct purchase or dividend reinvestment plan. In order to invest in Ross Stores’ stock, you’ll need to purchase it through a broker. Most brokers will allow you to reinvest dividends without any fee. Ask your broker for more information on how to set this up if you are interested.

Helpful Links

Ross Stores’ Investor Relations Website

Current quote and financial summary for Ross Stores (finviz.com)

Want to find out about more great dividend growth stocks?

Check out the list of current S&P Dividend Aristocrats.

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