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The TJX Companies (TJX) Hikes Dividend by 13%: Factors to Note

The TJX Companies, Inc. TJX has been focused on rewarding shareholders through dividend hikes and share repurchases. Moving on these lines, the company unveiled a 13% raise in its quarterly dividend, taking it to 33.25 cents per share. This is payable on Jun 1, 2023 to shareholders of record as of May 11.

This marks the off-price retailer’s 26th dividend hike over the past 27 years. During the said period, the company’s dividend increased at a compound annual rate of 20%. TJX currently has a dividend payout of 37.8% and a dividend yield of 1.5%. With an annual free cash flow return on investment of 8.5%, the dividend payout is likely to be sustainable.

Apart from this, The TJX Companies remains committed to its significant share repurchases. In the fourth quarter of fiscal 2023, the company returned $791 million to shareholders. The company repurchased $540 million in stock, retiring 5.7 million shares. The company paid out $341 million in shareholder dividends.

Management had shares worth $1.5 billion remaining under its repurchase plan as of the end of fiscal 2023. It approved a new plan to make repurchases of up to an additional $2 billion. The company plans to repurchase shares worth $2-$2.5 billion in the fiscal year ending Feb 3, 2024.

These actions underscore The TJX Companies’ commitment to shareholders alongside highlighting its confidence in continuing to generate robust sales, profitability and cash flow. The company generated operating cash flow of $4.1 billion in fiscal 2023.

The TJX Companies, Inc. Price, Consensus and EPS Surprise

The TJX Companies, Inc. price-consensus-eps-surprise-chart | The TJX Companies, Inc. Quote

What Else to Know?

The TJX Companies ended fiscal 2023 on a solid note, with the fourth-quarter top and bottom lines increasing year over year, and the former cruising ahead of the Zacks Consensus Estimate. The company witnessed strength in its apparel and accessories categories in fiscal 2023, while sales at home businesses came in soft as the company saw exceptional growth in the preceding two years.

Management remains optimistic about its fiscal 2024 performance. For fiscal 2024, it envisions the adjusted EPS in the range of $3.29-$3.41. The company expects an overall comparable store sales increase of 2-3% in fiscal 2024.

For the first quarter of fiscal 2024, management anticipates an EPS between 68 and 71 cents. For the quarter, the company is projecting overall comparable store sales growth of 2-3%.

The TJX Companies has been benefiting from its solid store and e-commerce growth efforts. The company has been expanding its footprint fast in the United States, Europe, Canada and Australia. With an increasing number of consumers resorting to online shopping, The TJX Companies has undertaken several initiatives to boost online sales and strengthen its e-commerce business.

We believe that The TJX Companies’ off-price model, along with its strategic store locations, impressive brands and fashion products, and efficient supply-chain management are likely to keep the company on the growth track.

Shares of this Zacks Rank #3 (Hold) company have rallied 22.7% in the past six months compared with the industry’s growth of 7.5%.

Have a Look at These Retail Picks

Here we have highlighted three better-ranked stocks.

Urban Outfitters URBN, which engages in the retail and wholesale of general consumer products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Urban Outfitters’ current financial-year EPS suggests growth of 41.7% from the year-ago reported figure. URBN has an expected EPS growth rate of 18% for three to five years.

DICK'S Sporting Goods DKS operates as a sporting goods retailer and currently carries a Zacks Rank #2 (Buy). DKS has an expected EPS growth rate of 5.4% for three to five years.

The Zacks Consensus Estimate for DICK'S Sporting’s current financial-year EPS suggests a rise of 11.1% from the year-ago reported figure. DKS has a trailing four-quarter earnings surprise of 10%, on average.

Ulta Beauty ULTA operates specialty retail stores selling cosmetics, fragrances, haircare and skincare products, and related accessories and services. ULTA currently carries a Zacks Rank #2.

The Zacks Consensus Estimate for Ulta Beauty’s current financial-year EPS suggests an increase of 5% from the year-ago reported figure. ULTA has a trailing four-quarter earnings surprise of 26.2%, on average. 

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