Retail is a difficult business. There is a lot of competition and there are always new stores popping up that try to target different parts of the market. As a result, success in retail is generally fleeting, and it often seems easier to pick the losers than to pick winners. Therefore, I tend to stay away from retailers as an investor. Nevertheless, there is a place for retailers in your portfolio. After all, retail is an essential part of the economy, and the best retailers have been wildly successful.
One way to go about choosing retailers is to find one among the Dividend Aristocrats. Dividend Aristocrats are companies that have raised dividends every year for at least 25 years. Companies with such a track record have proven the following:
- It can generate free cash-flow consistently.
- It has sustainable business models.
- It’s shareholder friendly.
- It can grow its businesses.
There aren’t many retailers among the Dividend Aristocrats, which is an honor that is often reserved for consumer staples companies and utilities. However, when you find a retailer among the group, it may be a good idea to latch on, because these companies have found a market niche and proven that it can buck the trend and succeed over the long run. Here are four worth considering.