True Religion and Hanesbrands initiate dividends

Both apparel retailers have announced recently they will get started with paying dividend to their investors, as part of their dividend payback policies. “Signs of economic recovery have made share buybacks and dividend increases a common

factor among companies with ample cash. Apart from enhancing shareholders' return, an attractive dividend payment strategy lifts the market value of the stock,” explain analysts at Zacks in a note.

Jeff Van Sinderen, an analyst with B. Riley Caris, is a big believer in True Religion Apparel (TRLG). The exclusive jeans brand recorded sales of 467 million dollars in 2012.

According to Van Sinderen, “as True Religion matures, it should generate wads of cash that can be used to boost payouts.” The company initiated a quarterly dividend of 20 cents per share in May 2012.

In October, True Religion announced that it may be interested in selling out. Given the company's growth potential—analysts see earnings growing at an annual pace of 15 percent over the next few years—Van Sinderen believes a buyer would have to pay a premium price. But even if True Religion isn't acquired, Van Sinderen thinks it's an inspiring investment, reported ‘Kiplinger’.

Hanesbrands initiates dividend

In the same vein, analysts at Zacks have highlighted that Hanesbrands Inc. (HBI), announced that it will initiate its dividend payback policy. In the recently held Investor Day conference call, the company announced that it will pay a regular quarterly dividend of 20 cents per share starting from June 3, 2013 to stockholders of record at the close of business on May 20, 2013. The annualised dividend per share stands at 80 cents per share. The dividend yield is 58.6 percent, Zacks outlined in a note published Tuesday.

“The initiation of the quarterly dividend is a part of the company's cash deployment strategy. The apparel chain is settled in a solid free cash flow position with a price to free cash flow ration of 10. Hanesbrands intends to use almost 20 percent to 25 percent of its free cash flow to pay dividend.”

In a recent conference call, Hanesbrands highlighted its Innovate to Elevate Strategy as a part of boosting its earnings. The Innovate to Elevate strategy aims at using product innovation to enhance the brand value of the company.

The company also revealed that apart from paying dividends and buying back shares, the company will use its cash for bolt-on acquisitions. For the first quarter 2013, Hanesbrands expects sales to be 945 million dollars and operating profits to be between 82 million and 85 million dollars. Quarterly earnings are expected to lie within the range of 0.48 to 0.51 dollars per share. Finally, Hanesbrands reaffirmed its sales guidance of 4.6 billion dollars for the full year.