I'm always on the lookout for new to me dividend growth companies and recently received a request to do a full analysis on Family Dollar Stores, Inc. (FDO). What was really surprising is that Family Dollar Stores has a 38 year history of increasing the dividend to shareholders. Family Dollar Stores is a major player in the discount retail space operating over 8,000 stores throughout the United States. Shares of Family Dollar Stores closed trading on Friday, April 11th at $56.10 giving a current yield of 2.21%.
Analysts followed by Yahoo!Finance expect Family Dollar Stores to grow earnings 3.15% per year over the next 5 years and I've assumed they can grow at 2.75% in perpetuity. Running these numbers through a discounted earnings analysis with a 10% discount rate and summing over 30 years yields a fair value price of $44.62. This means the shares are trading at a 25.7% premium to the discounted earnings analysis.
Click here to read the rest of the analysis over on Seeking Alpha.
I've updated my Stock Analysis page to include this analysis.
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