Vans, Timberland And More Brands Make VF Corp. Top Performer With 2% Dividend Yield

Over the past decade, shares of apparel maker VF Corp. (VFC) have had a terrific run, as the company once known principally as a jeans manufacturer successfully diversified its portfolio to incorporate a host of “lifestyle brands.” These days, the maker of Lee and Wrangler blue jeans also sells Timberland brand boots, JanSport backpacks, North Face outdoor clothes, Nautica brand sportswear and Vans sneakers. The strategy has been working pretty well. In 2011 alone, VF shares were among the top performers in the S&P 500.

VFC Chart

VFC data by YCharts

The growth through acquisition effort helped make VF one of the biggest clothing makers around while maintaining profit margins, and allowed the company to ride out the economy’s crash with less angst than many others experienced.

VFC Profit Margin Chart

VFC Profit Margin data by YCharts

VF’s of interest to dividend investors, because the company is one of the “Dividend Aristocrats,” a group of S&P component companies that have raised their dividends annually for at least 25 consecutive years. In VF’s case, the yield tends to swing in response to how big the annual hike is, and what’s happening with the share price; these days it’s a modest 1.97%.

But the aristocrats’ reliable yearly increases tend to bolster the returns that buy-and-hold investors receive: VF shares bought at $58.93 apiece in mid-June of 2005, when the stock was paying $1.08 a year in dividends, were yielding 1.8% at the time. But with subsequent increases, that investment is now effectively yielding 4.89%.

VFC Dividend Chart

VFC Dividend data by YCharts

Of course, any company that sells “lifestyle brands” is subject to eventually guessing wrong on next season’s consumer whims. And using acquisitions as a principal growth driver carries risks as well. But VF’s size, as well as its extensive global sourcing, provide helpful efficiencies. That’s important for a company that draws 10% of its revenue from sales to tight-fisted Wal-Mart (WMT).

Compared to some other apparel-industry players, like Nike (NKE), Ralph Lauren (RL) and Guess (GES), the company’s share price isn’t particularly expensive.

VFC PE Ratio Chart

VFC PE Ratio data by YCharts

And there’s little evidence that VF’s protracted growth spurt is slowing.

VFC Revenues TTM Chart

VFC Revenues TTM data by YCharts

For dividend investors, VF’s history of steady increases, combined with the company’s momentum, makes the stock worth a close look.

Whenever we invest to capture a dividend, we’re also acquiring the corporation’s underlying shares. So before making a commitment, it’s important to check out any company’s fundamentals, and to read through its 10-K.

James P. Miller is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.



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