Dollar Tree, Inc. (DLTR), Dollar General Corp. (DG): How Family Dollar Stores, Inc. (FDO) Could Make Dividend Investors Even Happier

Despite its stingy yield, it’s hard to fault Family Dollar on its dividend growth. The company has accelerated the growth pace in its annual increases, with its most recent boost earlier this year adding 24% to its previous payout after increases of 15% to 17% in each of the preceding three years. The stock price has simply increased at an even faster pace, making it difficult for Family Dollar’s dividend to keep up.

When will Family Dollar boost its payout?
With Family Dollar having made its last boost in March, investors can expect to see the company step up with another increase early next year. Its low payout ratio gives it plenty of room to consider another big increase, with amounts anywhere in the range of $0.30 to $0.35 per share seemingly perfectly reasonable. The question will be whether Family Dollar Stores, Inc. (NYSE:FDO) chooses to keep capital for faster expansion or errs on the side of returning more cash to shareholders. Either way, investors can expect dividend growth to continue to supplement share-price appreciation into the future.

The article How Family Dollar Could Make Dividend Investors Even Happier originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned, either.

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