15 Dividend Growth Stocks with the Highest Growth Rates

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

5-Year Average Dividend Growth Rate: 31.15%

On January 5, Goldman Sachs analysts added DICK’S Sporting Goods, Inc. (NYSE:DKS) to the firm’s US Conviction List in its monthly update. Goldman said Dick’s acquisition of Foot Locker puts the company “on the front lines” of “resuscitating” the sneaker category. The firm maintained its Buy rating and kept a $285 price target on the stock.

The optimism comes even as Foot Locker is going through a messy reset. In November, DICK’S Sporting Goods, Inc. (NYSE:DKS) missed estimates for Q3 profit and warned it could take up to $750 million in charges tied to a broad review of the Foot Locker business. That review includes store closures and an aggressive inventory cleanup.

Foot Locker has been under pressure for years. It has steadily lost market share as major brands, especially Nike, expanded their direct-to-consumer sales channels. On top of that, traffic in malls, where most Foot Locker stores are located, has weakened, which has further dragged down sales.

Dick’s acquired Foot Locker for $2.4 billion in May, and management is now moving quickly to reshape what it bought. Dick’s executive chairman Ed Stack said the company was taking decisive steps to “clean out the garage” by clearing out slow-moving inventory and shutting down underperforming locations.

Those actions, along with merger and integration expenses, are expected to lead to pre-tax charges ranging from $500 million to $750 million. Excluding those items, adjusted EPS for the quarter ended November 1 came in at $2.07, well below the $2.71 consensus estimate, according to LSEG data.

Looking ahead, the company expects Foot Locker’s fourth-quarter gross margin to fall sharply, by 1,000 to 1,500 basis points. It also expects pro-forma comparable sales to decline in the mid- to high-single-digit range as it works through excess inventory.

DICK’S Sporting Goods, Inc. (NYSE:DKS) is an omni-channel sporting goods retailer, operating a large global footprint across physical stores, e-commerce, and digital platforms, with operations spanning North America, Europe, Asia, and Australia, along with licensed store presence in parts of Europe, the Middle East, and Asia.