Saturday, March 5, 2016

Recent Buy: Kohl's

Kohl’s, Kohl’s, Kohl’s – the United States dividend department store currently on discount. Kohl’s, if you haven’t heard of it, is a company that owns and operates numerous stores throughout the USA. They offer clothes and other household items for men, women, and children and they are a common household name that many people recognize. They operate through brick and mortar stores but they also have a growing online business as well to reach those who don’t wish to actually walk around their smooth color toned stores.

With the recent sale of GPS (GAP Inc.) I was suddenly given a little bit of working capital. If you’ve been following my portfolio, you know that I like to stay in line with my future plans of diversification. As I have lost a clothing brand, I’d like to stay along the same lines with that working capital and reinvest it in such areas. With that being said, my latest buy was a stake in KSS (Kohl’s). The stock has of late stalled out and therefore plummeted to its low price where it currently is coasting. This presents an opportunity for investors such as myself that are smart enough to pull up their earnings and really sink my teeth in. It turns out after a look under the microscope that Kohl’s is overall a great company. They have steady income, their income is still positive, and they have a decent management structure that knows how things need to get done.

Dividend Yield: 4.22%
Annual Payout: $2.00
Payout ratio: 48.4%
Dividend Growth: 5 years of raises (since 2011)
Ex-Dividend Date: 3/7/2016

Key statistics:
EPS: 3.75
P/E Ratio: 12.47x

52 Week Moving Average: $39.23-79.60
Daily Range: $46.12-47.64

If we simply look at all the opportunity here, we have some serious chances to make out on this deal. Currently, the stock yields a very fair 4.22% dividend ($2.00/annual) with a strong 48.4% payout ratio. This means that you can take a nice bite out of a dividend payout with very little chance that they will be cutting their dividend raises any time soon. In addition, they’ve already had five years of raises to stand behind. This further supports the idea that they will likely continue to raise them in the future. In addition, getting in now assures that we will get paid for their upcoming dividends as their ex-dividend date is on the 7th.


If we move to their key statistics, you’ll notice that they have an EPS of 3.75 which is very normal for their sector and their P/E ratio is only 12.47x. This makes me feel very comfortable moving forward. The business is clearly being taken at a discount right now and all of the analysts are eagerly watching it trying to see what it will do. I strongly believe however that they will error on the side of buying in the coming months as a company as big and successful over the last years will be able to pull out ahead and find other ways to increase their profits and continue onward.

Final Buy:
12 shares of KSS at $47.51/share – high price for the day but still a great price to buy in overall

Total Cost

**Written 3/4/2016, posted later as incapable of posting at time of writing


  1. As a UK based investor, I haven't really heard of Kohls. But looking at those numbers, it looks like you have got yourself a great deal! The dividend yield is high and more importantly the payout ratio is very reasonable and I would expect for you to see some solid dividend increases over the coming years.

    1. Money Grower UK,

      I'm glad you agree with my assessment and purchase into the stock. I think they've fallen on bad times because we've moved out of the recession a bit here in the US and Kohl's offers discounted items so people may view it in a certain bucket. I expect their stock to rebound as soon as there is a single fear again about us moving towards a recession.

  2. Nice buy. I dont know why they have taken such a tumble over the past year, but they have been on my watchlist for some time now. I don't own any in my portfolio, but am always watching them. If only I had more funds to buy more stocks, this wouldnt be a problem. Congrats on the addition.

    1. I honestly think it's only taken a tumble because people have finally had free cash in the US with the drop in gas prices. I fully expect this to change as soon as gas prices decide they want to crush us again but we will have to wait and see!