Ross Stores Dividend: A Steady Hand in Retail's Next Growth Surge

In an era where economic uncertainty often rattles investor confidence, Ross Stores, Inc. (NASDAQ: ROST) stands out as a beacon of consistency. With a dividend payout ratio of just 23.27% as of August 2024 and a 34.03% cumulative dividend growth over three years, the retailer has carved a niche as a dividend stalwart in the volatile retail sector. This article dissects Ross Stores’ dividend sustainability, its resilience amid shifting consumer trends, and why its upcoming earnings could unlock further upside.

Dividend Consistency: A Foundation of Financial Prudence

Ross Stores’ dividend history tells a story of deliberate growth. Since 2015, its annual dividend per share has risen from $0.79 to $1.62 (projected for 2025), reflecting a 10-year annualized growth rate of 14.01%. While the pace slowed in the early years—peaking at 66.7% growth in 2018—the company has maintained a 3-year consecutive dividend increase streak, a testament to its financial discipline.

The magic lies in its low payout ratio, which allows Ross to reinvest heavily in inventory, store expansion, and technology. Unlike peers pressured to divert earnings to dividends, Ross retains 77% of its profits, fueling same-store sales growth and margin resilience.

Retail Resilience: Thrift Retail’s Untapped Potential

Ross Stores’ business model—discount apparel and home goods—has proven recession-resistant. As inflation pressures consumers to prioritize affordability, Ross’ value-driven strategy gains traction. Its 8.5% dividend yield growth over the past year mirrors rising investor demand for stable income plays.

Competitors like TJX Companies (TJX) face margin squeezes due to supply chain costs, but Ross’ vertical integration and data-driven inventory management keep its profit margins robust. A visual comparison of ROST vs. TJX’s same-store sales growth would underscore this advantage.

Upcoming Earnings: A Catalyst for Dividend Upside

With its March 18, 2025, ex-dividend date approaching, investors should monitor Q4 2024 earnings. Analysts project $1.62 annualized dividends by 2025, a 10% increase from 2024’s $1.47. If Ross exceeds earnings expectations—driven by holiday sales and cost controls—the payout ratio could dip further, enabling larger dividend hikes.

The company’s $1.5 billion share repurchase program, announced in 2023, also amplifies per-share value. Pairing this with a dividend yield of 1.06% (vs. the S&P 500’s 1.2%), Ross offers a rare blend of income and growth.

Why Act Now?

• Dividend Safety: A payout ratio under 30% leaves ample room for growth.
• Sector Leadership: Ross’ 14.01% 10-year dividend CAGR outpaces the S&P Retail Index’s 9.3%.
• Earnings Catalyst: Q4 results could validate its pricing power and inventory health.

Final Take

Ross Stores isn’t just surviving—it’s thriving. Its dividend machine, fueled by a conservative payout strategy and a recession-proof business model, positions it for sustained growth. With earnings around the corner and a dividend yield poised to rise, this is a buy now, hold forever opportunity.

Investors seeking stability in a volatile market should act swiftly: Ross’ combination of dividend safety and retail dominance makes it a cornerstone for long-term portfolios.

Data as of May 21, 2025. Past performance does not guarantee future results.