Best Buy (NYSE: BBY) stock price appreciation along with a long dividend growth history makes it a perfect stock for a defensive portfolio. BBY shares grew almost 50% since the beginning of this year; the shares are up 76% in the past three years.
On the other hand, the company has raised its dividends in the past fifteen consecutive years. Moreover, the company has been raising its dividends at a double-digit rate.
It has recently increased the quarterly dividend by 10% to $0.50 per share, yielding around 2.50%. Defensive investors always like to invest in companies that offer steady share growth along with solid dividends.
Financial Numbers are Supporting Gains
The specialty retail company has been growing at a robust pace. Its strategy of investing in high margin businesses is helping in enhancing margins. The company topped third-quarter revenue estimate by $57 million.
Its Q3 revenue grew 1.7% from the year-ago period. Moreover, the company generated 11% year over year earnings per share growth in the third quarter.
The company is showing confidence in its Blue strategy. The CEO says, “We are excited about our progress and opportunities as we execute on our Building the New Blue strategy, designed to develop deeper relationships with our customers and uniquely position us over the long term.”
The dividends are safe. This is because of its cash flow generation potential. The company has generated $937 million in operating cash flows in Q3 compared to dividend payments of $131 million. Indeed, the huge gap in operating cash flows and dividend payments offers room for more dividend increases.
Expectations for Bigger Earnings Growth is a Bullish Factor for Best Buy Stock
The company has updated its earnings guidance for the full year. This is because of its investments in high margin areas combined with the strategy of lowering the number of outstanding shares.
It has bought more than $300 million of common stock in the latest quarter. The retailer anticipates full-year earnings in the range of $5.81 to $5.91, representing double-digit growth from last year. Overall, several catalysts are offering support to Best Buy stock price and dividends