Super Retail Group Ltd (ASX: SUL) shares currently offer a fully-franked 5.95% dividend yield. Are Super Retail shares a buy for dividend income?
About Super Retail
Super Retail Group is a retail conglomerate that traces its history back to the 1970s and is now one of the biggest in the country. It operates a number of recognisable retail brands including BCF Boating Camping Fishing, Macpac, Rebel, and Supercheap Auto. It’s headquartered in Brisbane and has over 12,000 employees in Australia, New Zealand and China.
CEO Says It’s “Tough Environment”
In a trading update released 30th April 2019, Super Retail reported like for like (LFL) growth in the 17 weeks to 27th April 2019 of 4.3% across the group, with the largest growth coming from BCF (5.3%)
Managing Director and CEO Anthony Heraghty was pleased with the result, saying, “Our trading performance is encouraging in a tough environment and confirms the underlying strength of our business and our brands.”
The “tough environment” he referred to is likely a result of the growth of e-commerce which is hurting margins for brick-and-mortar stores that are forced to compete on price despite higher overheads.
In the trading update, Super Retail reported that all businesses were performing in line with full-year expectations.
Dividend Growth
Despite tough retail conditions, Super Retail has a phenomenal track record of consistently increasing dividends since 2005. That’s a record that not many competitors come close to.
This is the sort of track record to look for in dividend investments, and the combination of consistent growth and a high yield make this look attractive. To top it off, over the last ten years the Super Retail share price has appreciated 141%, an annualised growth rate of approximately 9.19%.
This is certainly a company that is worth another look. The question to ask is whether online retail will eventually diminish the margins to the point where Super Retail starts cutting dividends. I’m not sure of the answer to that question just yet.
For now, I’ll put it on my watchlist along with the high-quality companies mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
