10 Best Retail Dividend Stocks to Buy

In this article, we discuss 10 best retail dividend stocks to buy.

The retail sector has experienced a major shift since the onset of the pandemic in 2020. It has swiftly responded to changing customer demands by increasing digital services and adjusting its operations accordingly. An increasing number of consumers now opt for the convenience and accessibility of online shopping.

According to a report by Forbes, digital commerce exceeded $1 trillion in a single year for the first time, as reported by Comscore. The last quarter contributed over $332.2 billion. It is important to note that these figures exclude revenues from the travel sector, which could potentially add several hundred billion dollars. Overall, retail sales last year increased by 7% compared to 2021, reaching a total of $4.9 trillion, as reported by National Retail Federation (NRF). This growth rate surpassed the average annual retail sales growth of 3.6% seen before the pandemic.

Also read: 10 Cheap Retail Stocks to Buy

During the market turbulence of last year, almost all sectors were impacted, and the effects continue to be felt despite the market’s recovery. The retail sector has also been affected by persistent inflation and consecutive increases in interest rates. According to Deloitte, GDP growth is projected to decrease to 0.9% in 2023 from an estimated 2% in 2022 and 5.9% in 2021. A slowing economy is likely to limit the growth of retail sales. However, a relatively strong labor market may help to sustain sales to some extent. Nevertheless, there is a notable possibility that a recession could have a significantly negative impact on retail sales. The report also mentioned that the economy would shrink if a recession occurs, and unemployment would increase. This could cause a larger-than-expected drop in consumer and business demand, leading to a decline in retail sales.

Despite the challenges posed by inflation, retail stocks performed well last year and continue to show strong performance this year as well. The S&P Retail Select Industry Index, which tracks the performance of retail stocks like Walmart Inc. (NYSE:WMT), The TJX Companies Inc. (NYSE:TJX), and Ross Stores, Inc. (NASDAQ:ROST), delivered a 6.94% return in the past 12 months. The index is up 11.58% year-to-date, as of July 19. Moreover, NRF forecasted that retail sales are expected to grow between 4% and 6% in 2023 compared to 2022, with the expected sales ranging from $5.13 trillion to $5.23 trillion.

In view of this, we have compiled a list of some of the best dividend stocks from the retail sector.

Photo by Franki Chamaki on Unsplash

Our Methodology:

For this article, we scanned Insider Monkey’s database of 943 hedge funds as of Q1 2023 and picked companies that operate in the retail industry. These companies sell goods and services directly to consumers for personal use and operate through physical stores, online platforms, or a combination of both. From that list, we picked 10 stocks with the highest number of hedge fund investors and ranked them in ascending order of hedge funds’ sentiment towards them.

10. DICK’S Sporting Goods, Inc. (NYSE:DKS)

Number of Hedge Fund Holders: 43

DICK’S Sporting Goods, Inc. (NYSE:DKS) is an American sporting goods retailer that operates a wide network of stores across the country. The company offers a diverse range of sports equipment, apparel, footwear, and accessories for its consumers.

In fiscal Q1 2024, DICK’S Sporting Goods, Inc. (NYSE:DKS) reported revenue of $2.84 billion, which showed a 5.2% growth from the same period last year. At the end of April, it had over $1.6 billion available in cash and cash equivalents. The company’s comparable store sales also saw a 3.4% year-over-year growth.

DICK’S Sporting Goods, Inc. (NYSE:DKS) currently pays a quarterly dividend of $1.00 per share, having raised it by 105.1% in March this year. This was the company’s eighth consecutive year of dividend growth. Not only did the company grow its payouts, but it also distributed nearly $105 million to shareholders in dividends in its most recent quarter. With a dividend yield of 2.96% as of July 19, DKS is one of the best dividend stocks on our list. It can be added to dividend portfolios alongside Walmart Inc. (NYSE:WMT), The TJX Companies Inc. (NYSE:TJX), and Ross Stores, Inc. (NASDAQ:ROST).

At the end of Q1 2023, 43 hedge funds in Insider Monkey’s database reported having stakes in DICK’S Sporting Goods, Inc. (NYSE:DKS), up from 40 in the previous quarter. These stakes have a collective value of over $1.78 billion.

9. The Kroger Co. (NYSE:KR)

Number of Hedge Fund Holders: 43

The Kroger Co. (NYSE:KR) is an Ohio-based retail company that is primarily focused on the sale of groceries and related products. The company is one of the best dividend stocks from the retail sector as it has raised its payouts for 17 years in a row. It currently offers a quarterly dividend of $0.29 per share for a dividend yield of 2.47%, as o July 19.

The Kroger Co. (NYSE:KR) announced its first quarter 2023 earnings on June 15. The company’s revenue for the quarter grew by 1.3% on a year-over-year basis to $45.1 billion. Year-to-date its operating cash flow came in at $2.8 billion, growing from $1.1 billion in the prior-year period. For Fy23, it expects its adjusted free cash flow between $2.5 billion to $2.7 billion.

According to Insider Monkey’s database of Q1 2023, 43 hedge funds owned stakes in The Kroger Co. (NYSE:KR), compared with 42 a quarter earlier. These stakes have a total value of nearly $4 billion. With 50 million shares, Berkshire Hathaway was the company’s leading stakeholder.

8. Target Corporation (NYSE:TGT)

Number of Hedge Fund Holders: 46

Target Corporation (NYSE:TGT) is next on our list of the best dividend stocks from the retail sector. The American retail corporation operates a vast network of physical stores across the country, as well as an online platform that enables customers to shop conveniently from their homes.

On June 15, Target Corporation (NYSE:TGT) grew its quarterly dividend by 1.9% to $1.10 per share. This increase marked the company’s 52nd consecutive year of dividend growth. The stock’s dividend yield on July 19 came in at 3.32%.

In the first quarter of 2023, Target Corporation (NYSE:TGT) posted revenue of $25.3 billion, representing a 0.6% increase compared to the same period the previous year. Its operating cash flow for the quarter came in at $950 million and it returned $497 million to shareholders through dividends, up from $424 million last year.

As of the close of Q1 2023, 46 hedge funds in Insider Monkey’s database reported having stakes in Target Corporation (NYSE:TGT), down from 48 a quarter earlier. These stakes are collectively valued at roughly $530 million.

Madison Investments mentioned Target Corporation (NYSE:TGT) in its Q2 2023 investor letter. Here is what the firm has to say:

“Target Corporation (NYSE:TGT) stock weakened following its first quarter earnings report. While results were better than expected, with same store sales in line with expectations and a stronger gross margin resulting in a 16% earnings beat, Target highlighted softness across discretionary categories. The discretionary weakness resulted in second quarter same store sales guidance in a wide range of low single digit negative to a low single digit gain. Target’s inventory position continues to improve, and they have cost savings initiatives in place to drive margin improvement over the next few years. We continue to view Target as well positioned for long-term growth with its strong owned brand strategy and omnichannel offerings.”

7. Ross Stores, Inc. (NASDAQ:ROST)

Number of Hedge Fund Holders: 53

Ross Stores, Inc. (NASDAQ:ROST) is an American company that operates a chain of off-price department stores. The company offers a wide selection of name-brand and designer apparel, accessories, and other merchandise at discounted prices.

Ross Stores, Inc. (NASDAQ:ROST), one of the best dividend stocks, currently pays a quarterly dividend of $0.335 per share. As of July 19, the stock has a dividend yield of 1.19%.

Ross Stores, Inc. (NASDAQ:ROST) generated $4.49 billion in revenues in the first quarter of 2023, which saw a 3.37% growth from the prior-year period. Its net earnings jumped to $371 million, from $338.4 million in the same period last year. The company’s operating cash flow for the quarter also grew to over $413 million.

Ross Stores, Inc. (NASDAQ:ROST) experienced a positive hedge fund sentiment in Q1 2023, with hedge fund positions growing to 53 in Q1 2023 from 46 in the previous quarter, as shown by Insider Monkey’s database. The stakes owned by these funds have a total value of over $1.32 billion.

Madison Investments mentioned Ross Stores, Inc. (NASDAQ:ROST) Q1 2023 investor letter. Here is what the firm has to say:

“The bottom five contributors for the quarter were Ross Stores, Inc. (NASDAQ:ROST), W.R. Berkley, Gartner, Glacier Bancorp, and Carlisle. Sales trends at Ross Stores remain so-so, with flattish sales compared to a year ago. The low-to-moderate income consumer has started to struggle as stimulus payments and government support initiatives from the COVID period are wearing off, and inflation is eating away at purchasing power.”

6. Dollar General Corporation (NYSE:DG)

Number of Hedge Fund Holders: 53

Dollar General Corporation (NYSE:DG) ranks sixth on our list of the best dividend stocks from the retail sector. The company was a part of 53 hedge fund portfolios in Q1 2023, as per Insider Monkey’s database. The stakes owned by these funds collectively amounted to over $1.74 billion.

Dollar General Corporation (NYSE:DG) operates as a discount retailer in the US. The company specializes in providing a wide range of everyday consumer products at affordable prices. It currently pays a quarterly dividend of $0.59 per share and has raised its dividends consistently for the past five years. The company’s shares offer a yield of 1.42%, as of July 19. In addition to DG, Walmart Inc. (NYSE:WMT), The TJX Companies Inc. (NYSE:TJX), and Ross Stores, Inc. (NASDAQ:ROST) are some other retail dividend stocks to consider.

Though Dollar General Corporation (NYSE:DG)’s revenue for Q1 2023 missed Street’s estimates, it saw a 6.7% year-over-year growth at $9.3 billion. The company’s operating cash flow for the quarter came in at $191 million and its operating profit came in at roughly $741 million.

5. Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Holders: 63

Costco Wholesale Corporation (NASDAQ:COST) is a Washington-based retail company that operates a chain of membership-only warehouse clubs. The company is known for offering a wide range of products at discounted prices to its members.

Costco Wholesale Corporation (NASDAQ:COST) is one of the best dividend stocks on our list as it has raised its payouts for 19 years in a row. The company currently pays a quarterly dividend of $1.02 per share and has a dividend yield of 0.74%, as of July 19.

Of the 943 hedge funds tracked by Insider Monkey at the end of Q1 2023, 63 funds owned stakes in Costco Wholesale Corporation (NASDAQ:COST), worth collectively over $1.8 billion. Among these hedge funds, Bridgewater Associates was one of the company’s leading stakeholders in Q1.

4. The Home Depot, Inc. (NYSE:HD)

Number of Hedge Fund Holders: 65

The Home Depot, Inc. (NYSE:HD) is an American home improvement retailer. The company offers a wide range of products, tools, and services for various home improvement projects. In the first quarter of 2023, the company posted revenue of $37.3 billion and its net earnings amounted to over $3.8 billion. Its operating cash flow for the quarter grew to $5.6 billion, from $3.8 billion in the prior-year period.

On May 18, The Home Depot, Inc. (NYSE:HD) declared a quarterly dividend of $2.09 per share, which was in line with its previous dividend. The company maintains a 13-year streak of consistent dividend growth, which makes it one of the best dividend stocks in the retail sector. The stock has a dividend yield of 2.62%, as of July 19.

The number of hedge funds tracked by Insider Monkey owning stakes in The Home Depot, Inc. (NYSE:HD) grew to 65 in Q1 2023, from 62 in the previous quarter. These stakes are collectively worth over $2 billion.

Madison Investments highlighted The Home Depot, Inc. (NYSE:HD)’s sustainable activities in its Q2 2023 investor letter.

“The Home Depot, Inc. (NYSE:HD) celebrates 30 years of giving back. Team Depot was created in 1993 as a way of organizing associates who were eager to volunteer in their communities. For 30 years, Team Depot associates have worked side by side with non-profits around the United States. Focus areas include spending time with the elderly and activities with at risk youth. Team Depot also improves the homes and lives of veterans and helps communities impacted by natural disasters.

During the quarter, Home Depot set a goal for battery-powered products to represent over 85% of outdoor lawn equipment sales in the U.S. and Canada by the end of fiscal 2028. Push lawn mowers and handheld leaf blowers and trimmers will run on rechargeable battery technology instead of gas. This will reduce 2 million metric tons of greenhouse gas emissions annually.”

3. Lowe’s Companies, Inc. (NYSE:LOW)

Number of Hedge Fund Holders: 67

Lowe’s Companies, Inc. (NYSE:LOW) is a North Carolina-based retail company that specializes in home improvement products and services. The company currently pays a quarterly dividend of $1.10 per share, having raised it by 5% in May this year. This marked the company’s 59th consecutive year of dividend growth. With a dividend yield of 1.91% as of July 19, LOW is one of the best dividend stocks on our list.

As of the close of Q1 2023, 67 hedge funds in Insider Monkey’s database reported having stakes in Lowe’s Companies, Inc. (NYSE:LOW), compared with 68 in the previous quarter. These stakes have a consolidated value of over $5 billion. With over 10 million shares, Pershing Square was the company’s leading stakeholder in Q1.

2. The TJX Companies, Inc. (NYSE:TJX)

Number of Hedge Fund Holders: 73

The TJX Companies, Inc. (NYSE:TJX) is an American multinational retail company that specializes in off-price retailing. In the first quarter of 2023, the company generated $11.78 billion in revenues, which showed a 3.2% growth from the same period last year. Its operating cash flow for the quarter came in at $745 million. The company also paid $341 million to shareholders in dividends during the quarter.

One of the best dividend stocks on our list, The TJX Companies, Inc. (NYSE:TJX) currently offers a quarterly dividend of $0.3325 per share. The company has been rewarding shareholders with growing dividends for the past 26 years. As of July 19, the stock has a dividend yield of 1.55%.

At the end of Q1 2023, 73 hedge funds tracked by Insider Monkey were bullish on The TJX Companies, Inc. (NYSE:TJX), up from 69 in the previous quarter. The collective value of these stakes is over $2.75 billion.

1. Walmart Inc. (NYSE:WMT)

Number of Hedge Fund Holders: 91

Walmart Inc. (NYSE:WMT) tops our list of the best dividend stocks. The multinational retail corporation has a remarkable track record of consistently increasing its dividends for 50 consecutive years. Currently, it pays a quarterly dividend of $0.57 per share. As of July 19, the stock’s dividend yield stands at 1.47%.

In the first quarter of 2023, Walmart Inc. (NYSE:WMT) saw an increase in its popularity among hedge funds. Hedge fund positions in the company rose from 66 in the previous quarter to 91, according to Insider Monkey’s database. The combined value of stakes owned by these funds amounted to over $5.6 billion.

You can also take a look at 12 Best Reddit Stocks To Buy Now and 20 Stocks Wall Street Analysts Expect to Dive The Most

Follow Insider Monkey on Twitter

Suggested articles:

• 12 Best Dividend Stocks Under $25
• 10 Best Artificial Intelligence Stocks Under $10
• 10 Best One Dollar Stocks to Buy Now

Disclosure. None. 10 Best Retail Dividend Stocks to Buy is originally published on Insider Monkey.