Every day this week Cramer is focusing on the companies that have pushed through the largest dividend boosts this year. So far he has recommended Hasbroand Core Labs, and on Wednesday he added Ross Stores, which raised its payout last Thursday, to the list.
"Ross Stores, with its 45 percent dividend hike," Cramer said, "is the largest so far this year."
The yield may be small at 1.4 percent, but the Mad Money host said that right now he is only concerned about dividend boosters, not high-yielders. And given that Ross is expected to earn $3.88 next year and $4.33 in 2012, the company has more than enough money to cover its 64-cent annual dispursal.
But when it comes down to it, Cramer said, the strength of ROST is all about expanding from regional to national growth. The company has close to 1,000 locations in just 27 states, with very little presence in the Northeast or the Midwest. Management thinks they can double this store count to 2,000 in the US. It also has multiple concepts, including dd’s Discounts, that cater to lower-income customers. Currently, dd’s are in four states with 53 stores, and Cramer said they are seeing improvement in their profitability.
Now, ROST is three points off its 52-week high. And it's trading at less than 11 times expected 2011 earnings despite having a long-term growth rate of more than 14 percent. Cramer thinks the numbers could be way too low.
The bottom line: Cramer said the bigger the boost, the better shape the company is likely to be in. That certainly seems to be true for Ross Stores.
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