Our analysis is based on comparing Aaron’s, Inc. with the following peers – Conn’s, Inc., Best Buy Co., Inc., Rent-A-Center Inc, Pier 1 Imports, Inc., hhgregg, Inc., Williams-Sonoma, Inc. and GameStop Corp. Class A (CONN-US, BBY-US, RCII-US, PIR-US, HGGGQ-US, WSM-US and GME-US).
Aaron’s, Inc.’s dividend yield is 0.31 percent and its dividend payout is 5.79 percent. This compares to a peer average dividend yield of 2.58 percent and a payout level of 32.85 percent. This relatively lagging dividend performance could spur some dividend action going forward – except the company’s current dividend quality score of 58 out of a possible score of 100 is only about average.
Dividend Quality Overview
- Over the last twelve months (prior to September 30, 2017), AAN-US paid a low quality dividend, which represents a yield of 0.31% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 3 were high quality and 2 were low quality.
- The ending cash balance, with a dividend coverage of 19.09x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to September 30, 2017), AAN-US paid a low quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 23.71x), investing cash flow (coverage of -25.83x), issuance cash flow (coverage of -21.63x) and twelve-month prior cash (coverage of 43.57x), for a total dividend coverage of 20.09x.
AAN-US’s issuance cash flow includes outflows from net debt repayment (coverage of -16.94x) and net share buybacks (coverage of -3.91x). Thus, the total coverage including share buybacks is 24.00x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm had to dip into the beginning cash balance to pay the dividend, which suggests a low dividend quality.
|Dividend Yield (%)||0.27||0.18||0.35||0.42||0.32||0.31|
|Dividend Payout (%)||2.76||4.56||7.96||5.05||5.37||5.79|
A complete list of metrics and analysis is available on the company page.
Aaron’s, Inc. retails consumer electronics, computers, residential furniture, household appliances, and accessories. It engages in the lease ownership, lease and retail sale of products such as widescreen and liquid crystal display televisions, computers, living room, dining room and bedroom furniture, washers, dryers, and refrigerators. It operates through the following segments: Sales and Lease Ownership, Progressive, DAMI, Franchise, and Manufacturing. The Sales and Lease Ownership segment offers electronics, furniture, appliances, and computers. The Progressive segment involves a lease-purchase option for customers to acquire goods. The Franchise segment awards franchises and supports franchisees of sales and lease ownership concept. The Manufacturing segment manufactures upholstered furniture and bedding. The company was founded by R. Charles Loudermilk, Sr. in 1955 and is headquartered in Atlanta, GA.
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