Has Ross Stores, Inc. (ROST) Become the Perfect Stock?

Ross Stores has continued to benefit from its ability to thread the needle between offering value to discount-seeking customers and serving up popular fashions. Using a similar off-price brand-name retail model to that of rival The TJX Companies, Inc. (NYSE:TJX) and its TJ Maxx stores, Ross has fought back against the inexorable pull of Amazon.com, Inc. (NASDAQ:AMZN)‘s online retail empire by offering better prices in many cases to go with its tactile shopping experience. Ross has even managed to post better margins and sales growth than TJX recently.

One of the best things about Ross is that because it already discounts its merchandise, it already carries a value perception without cutting its prices further. By contrast, Kohl’s Corporation (NYSE:KSS) had to cut its outlook last month because it had to make deep discounts late in the holiday season — something that’s an ever-present danger for just about every retailer.

Just last week, Ross boosted its dividend by 21% and raised its earnings guidance for its just-ended fiscal quarter. With a big buyback program also accompanying the higher payout, Ross is catering to its shareholders as well as its customers.

For Ross to improve, it needs to focus on continuing to boost its dividend with a goal of getting it to 2%. That could take a while, but given the retailer’s fundamentals, it’s not unreasonable to expect Ross to get closer to perfection in the years ahead.

The article Has Ross Stores Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com.

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