Kohl's: Flat Top Line And Declining Margins Mean Risk To The Dividend

In this article, I present a dividend safety analysis of Kohl’s Corporation (NYSE:KSS). The company is a discount department store retailer in the U.S. Kohl’s stock price has not really gone anywhere in almost 20 years. The stock price was near $50 per share in mid-2000 and is about that now. There have been fluctuations in stock price due to the Great Recession and on occasion a string of good results. Now, the stock price is down about 33% from the 52-week high and recently dropped almost 20% in one day after a profit guidance cut in the Q3 FY 2019 release.

But with that said, the main interest here is Kohl’s high forward dividend yield of 5.5%. Kohl’s is a Dividend Challenger having raised the dividend for eight consecutive years. However, Kohl’s top line has not grown much, and operating margins have been under pressure due to intense competition. The high yield is attractive, but those seeking income should be wary due to competition, tariffs, and the fact the Kohl’s likely has no moat for its business. More recently, dividend safety metrics have not been trending in the right direction. I do not view the dividend as very safe, and in my opinion, the stock is a sell.

Please read the complete article at my profile on Seeking Alpha.

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