Want $1,000 in dividend income? Here’s how much you should invest in Dollar General stock

We are approaching the tenth anniversary of general dollarhis (DG -0.06%) dividend. It is said that in this considerable period of time the yield of payments has never been as high as in the last few weeks.

This is not necessarily a good thing because the increased yield is due to a significant decline in the stock after earnings. Let’s look at the company and see how many shares an investor would need at these low stock prices to collect $1,000 in annual dividend payments.

An attractive dividend yield

These days, Dollar General pays a quarterly dividend of $0.59 per share, which annualizes to $2.36 per share and yields 2.9%. So an investor would need to own 424 shares of the company (with a recent market value totaling just over $35,700) to earn that $1,000 per year passive income stream.

Until recently, the company routinely increased its payouts every year, sometimes substantially. For example, in pandemic-ravaged 2022, it raised its quarterly dividend nearly 31% higher to $0.55 per share.

Note that this is not far from the current distribution of $0.59 per share, which it has been paying since the beginning of 2023. In other words, its enthusiasm for increasing the dividend may be fading.

A second quarter to forget

This is understandable when we examine Dollar General’s most recent results. In the second quarter, its same-store sales rose just 0.5%; new store openings contributed to a 4% increase in total net sales and change. Worse, overall net income fell off a cliff, falling 20% ​​to just over $374 million.

Both headline results were well below consensus analysts’ estimates. Additionally, management aggressively cut its full-year same-store and net sales and earnings-per-share forecasts.

Management attributed this package of negative developments to hesitant consumers, but other retailers in the standard and discount segments are coping better with this challenge. To me, Dollar General is a struggling company that doesn’t seem to have a good strategy to get through tough times. This stock is not a buy for me right now, despite that attractive dividend yield.