Thursday, October 20, 2016

Dividend Analysis: VF Corporation - VFC

I tend to stay up to date with multiple DGI blogs these days. While I don't typically comment as much as I can or should (I'm working on that) I love reading what the community and its members have to contribute each month. Some of my favorite posts each month are the recent purchases posts. Seeing what everyone has bought and their reasoning behind it is always so exciting. As a student pursing a Business Data Analytics certificate alongside my Supply Chain Management degree, seeing the technical analysis that goes into every purchase tells me that my certificate will not go unused.
Furthermore, I have been able to utilize my skills with Microsoft Excel to create some very useful and pretty dang cool charts, graphs, and metrics analysis. I believe as a business student that being able to use Excel effectively is something that will be very beneficial for me moving forward. If you haven't already, I suggest looking into some free online Excel courses, even just to brush up. It seems everyday there is more data and more decisions to be made, all of which can be made easier with Excel.


This month, I have decided to do my very first dividend analysis on the VF Corporation. Per their website, "Organized in 1899, VF Corporation is a global leader in branded lifestyle apparel, footwear and accessories, global iconic brands, 62,000 associates and $12.4 billion in revenue. VF’s businesses and brands are organized into four categories called coalitions, consisting of: Outdoor & Action Sports, Jeanswear, Imagewear and Sportswear. While VF is highly diversified across brands, products, distribution channels and geographies, our One VF culture and approach to doing business provide a unique and powerful competitive advantage." VFC has within its portfolio many brands I am sure are familiar to you: Jan Sport, Lee, Nautica, Reef, The North Face, Timberland, and last but maybe most notable, Van's. As someone who has only been around for 22 years, I can't say that I can grasp the idea of a company being around for more than 5x my lifespan. What I can grasp is the brands VFC holds. I've worn, or used more than a few of the brands listed above and it never occurred to me that they were all held by a single entity. Seeing the diversity of the brands gives VFC an early check mark from me as I typically like to see diverse, and established product lines in business in this sector.

General Information

I'd like to provide some general information about VFC before moving forward. The information to follow is what I will have used in the dividend analysis to follow. All information gathered from on 10/19/16. 

Price: $54.62     P/E ttm: 21.57     Forward P/E: 14.93     Current Yield: 2.71%     Payout Ratio: 52%

Chowder: 19.91%     Continuous Div. Raises Since: 1985     Annual Payout: $1.43

SWOT Analysis

In my research I like to look at not only the company, but the market, the industry and several other factors as a whole to form an opinion. Utilizing a SWOT Analysis can help achieve a better overall picture of the forces in play here.

     - 58,000+ employees as of 2013
     - Strong brand portfolio filled with multiple house hold names
     - 79 outlet stores across 31 states

     - Global competition limits market share growth
     - Less penetration into global markets

     - Increase direct to consumer sales to reduce wholesaler dependance and increase margin
     - Increase E-commerce presence to match consumer trends

     - Increasing raw materials costs
     - Ever-changing consumer trends
     - Increasing pressure to source ethically

Div Analysis

Onto the part we've all been waiting for. I decided to focus on 14 key metrics that I deemed of the upmost importance when considering a potential purchase. Below you will find my overview chart listing these key metrics, my acceptance criteria.

As you can see, according to the trailing twelve month P/E of 21.57 I am considering VFC over valued when compared against it's 10yr P/E average. In a similar manner, when comparing VFC's current P/E against it's 5yr P/E average I consider VFC Fairly Valued. Looking at the Forward P/E of VFC I believe better buying opportunities will present themselves. 

Continuing on to EPS growth over the last 10 years I feel that 9.84% is pretty respectable. This EPS growth has led to over double the EPS VFC had in 2006. More recently EPS growth has slowed. This is not represented by the 5yr Earnings Growth Avg. as most of the recent downward movement has been within the last 3 years including the past 4 quarters.

When deciding if a dividend is healthy and being increased in response to business growth my favorite metrics are: 10yr dividend growth, 5yr dividend growth, current yield, payout ratio, chowder, and years of continuous increases. In these aspects VFC is a winner, the 11.25% 10yr dividend growth average shows a continued commitment to returning larger amounts of cash to the shareholders and I like that. With a payout ratio below 65% and a current coverage ratio of 2.2 I think this dividend is more than sustainable.


I like VFC and I think many of my fellow DGI bloggers do as well. The EPS has taken a small hit recently but this is providing us with the possible buying opportunity I am evaluating. With VFC's Dividend growth increasing, payout ratio under control, and P/E approaching fairly or under valued I am looking to start a position in VFC here pretty soon. A few percentage point drops in price and you will be seeing VFC in my recent purchases post.

I hope you enjoyed my first real dividend analysis! Please, I repeat, please do not hesitate to tell me if you think I overlooked or miscalculated something. I put a lot of effort into the analysis and would love to hear some feedback both positive and constructive!

Do you currently hold VFC?
Are you looking to add VFC any time soon?

I am a 22 year old kid who seeks to create a life of financial independence via passive income. The accumulation and growth of quality dividend yielding stocks will be the main source of income and this is my journey.


  1. Nice analysis DividendKid...hope you don't mind, we have added this analysis to our collection of stock analyses. :)

    We currently own shares of VFC in our Loyal3 account but also have it on our watch list. We love the dividend growth (especially in the past 5 years) and low payout ratio! And current prices are starting to look more attractive these days. I think we may buy more if prices dip near $50.

    Thanks for sharing. Best wishes. AFFJ

    1. I don't mind at all! Thats a very nice list of evaluations you have accumulated there!

      I might start a position a little sooner, but planning to make it a core holding of mine since its not often players in the consumer section dip into the fairly or undervalued area!

  2. Nice analysis of VFC. I do hold VFC in my account and so does baby DivHut. I think it can provide very well, from a dividend perspective, to anyone willing to hold long term. It has the cash flow to continue to pay and raise its dividend and though there are some current headwinds facing this company (mainly a very strong USD) I think that can change to a tailwind when the dollar inevitably drops. As that yield continues to march closer to 3%, VFC becomes more and more compelling.