CARTER'S INC (NYSE:CRI) – A High-Yield Dividend Stock Worth Considering

CARTER'S INC (NYSE:CRI) was identified by our dividend stock screener as a potential candidate for income-focused investors. The company, known for its children’s apparel brands, offers an attractive dividend yield while maintaining solid financial health and profitability. Below, we examine why CRI stands out for dividend investors.

Strong Dividend Yield and Growth

• High Dividend Yield: CRI currently offers a yearly dividend yield of 8.42%, significantly above the industry average of 3.62% and the S&P500 average of 2.37%.
• Reliable Dividend History: The company has paid dividends for at least 10 years, demonstrating a commitment to returning capital to shareholders.
• Dividend Growth: Over the past five years, CRI has increased its dividend at an average annual rate of 16.75%, indicating strong income growth potential.

Sustainability Considerations

• Payout Ratio: At 58.78%, the payout ratio is somewhat elevated but still manageable. However, investors should monitor earnings trends, as declining profits could pressure future payouts.
• Earnings Outlook: Analysts expect earnings to decline by 24.22% in the coming years, which may challenge dividend sustainability if not offset by cost controls or revenue stabilization.

Solid Financial Health

• Low Debt Risk: CRI has a Debt-to-Equity ratio of 0.59, below many industry peers, and its free cash flow comfortably covers debt obligations.
• Liquidity Strength: The company maintains a Current Ratio of 2.56, indicating strong short-term financial stability.

Reasonable Valuation

• Attractive P/E Ratio: CRI trades at a P/E of 5.53, well below both the industry average (35.92) and the S&P500 (27.45), suggesting undervaluation.
• Price-to-Free Cash Flow: The stock is cheaper than 93.88% of its peers based on this metric.

While CRI’s growth prospects are weak, its high yield, financial stability, and reasonable valuation make it a compelling option for income investors.

Our Best Dividend Stocks screener provides more high-quality dividend stock ideas.
For a deeper dive, review the full fundamental report on CRI.

Disclaimer

This is not investment advice. The analysis reflects observations at the time of writing, and investors should conduct their own research before making decisions.