Academy Sports and Outdoors, Inc. ASO has been following an incremental dividend policy since 2022. In sync with this, it recently boosted its investors’ sentiments again with a quarterly dividend hike.

The board of directors approved a quarterly dividend payout of 13 cents per share (52 cents per share annually), which is up 18.2% from the previous dividend payout of 11 cents per share (44 cents per share annually). The amount will be paid out on April 17, 2025, to shareholders of record as of March 25. Based on the closing price of $49.24 per share on Friday, the stock has a dividend yield of 1.1%.

The company’s focus on generating robust operating cash flow through various business fostering strategies and efficiently utilizing the free cash for rewarding its shareholders apart from reinvesting into the business holds the foundation of the hike.

What’s Aiding Academy Sports’ Dividend Policy?

Academy Sports maintains and executes a proportionate capital allocation approach through which it maintains shareholder value and fosters its business growth. As part of the capital allocation strategy, the company envisions rewarding its shareholders as an integral part, apart from other reinvestments. This goal is directly reflected in the regular dividend hikes since the start of dividend payments.

Considering the numbers of fiscal 2024 till the third quarter, it can be seen that the balance sheet has strengthened year-to-date. As of Nov. 2, 2024, ASO’s cash and cash equivalents increased 7.7% to $296 million from $274.8 million at the end of fiscal 2023. Moreover, the company also exercised initiatives to ensure the reduction of its debt levels. As of the fiscal third-quarter end, net long-term debt declined 17.2% to $483.1 million from $583.4 million at fiscal 2023-end. Such an effort is noteworthy while understanding the liquidity position and long-term prospects of a company.

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Through various strategic investments, including new store openings, improving the website experience, expanding its targeted marketing capabilities with its new loyalty program and streamlining its supply chain, ASO is driving its top-line growth. These efforts, favored by increased marketing initiatives, are supporting the company in managing its capital allocation approach.

As of Nov. 2, 2024, Academy Sports has returned to its shareholders $276.6 million in share repurchases and $23.8 million in dividend payments. This indicates year-over-year growth of 37.3% and 16.1%, respectively.

ASO Stock’s Price Performance

Shares of this sporting goods and outdoor recreation retailer have lost 9.7% in the past three months compared with the Zacks Leisure and Recreation Products industry’s 2.9% decline. Although soft sales volume in the sports and recreation merchandise, the apparel merchandise and the footwear merchandise divisions is marring prospects, robust sales in the outdoor merchandise division, coupled with favoring business initiatives, are expected to aid performance in the near term.

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Besides, the company’s trailing 12-month return on equity (ROE) is indicative of its growth potential and focus on maintaining shareholder value. Its ROE of 23.3% compares favorably with the industry’s 3.7%, indicating more efficiency in using shareholders’ funds than peers.

ASO’s Zacks Rank & Key Picks

Academy Sports currently carries a Zacks Rank #4 (Sell).

Here are some better-ranked stocks from the Consumer Discretionary sector.

Sportradar Group AG SRAD currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

SRAD has a trailing four-quarter earnings surprise of 83.3%, on average. The stock has surged 89% in the past year. The Zacks Consensus Estimate for SRAD’s 2025 sales and earnings per share (EPS) implies growth of 15.7% and 94.7%, respectively, from the year-ago levels.

Life Time Group Holdings, Inc. LTH presently sports a Zacks Rank of 1. LTH has a trailing four-quarter earnings surprise of 21.6%, on average. The stock has soared 90% in the past year.

The consensus estimate for LTH’s 2025 sales and EPS implies growth of 12.9% and 37.9%, respectively, from the year-ago levels.

RCI Hospitality Holdings, Inc. RICK currently sports a Zacks Rank of 1. RICK has a trailing four-quarter negative earnings surprise of 62.9%, on average. The stock has lost 16.8% in the past year.

The Zacks Consensus Estimate for RICK’s fiscal 2025 sales and EPS indicates an increase of 2.5% and 1,278.8%, respectively, from the year-ago levels.

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Life Time Group Holdings, Inc. (LTH) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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