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Gamestop Dividends

Analyzing the dividend polices of Gamestop.

Please review Gamestop's dividends over the past three years. Then, answer the following questions in Word (except for the Excel portion specifically noted):

1. What has occurred with Gamestop's dividend payout, dividend yield, and dividend per share over the past three years? Do you have any explanations for what has occurred?

2. How does Gamestop's dividend payout, dividend yield, and dividend per share compare to other companies in its industry? Has the company's dividend strategy been similar to other companies in its industry?

3. You are now to use Excel and plot Gamestop's earnings and dividends over the past three years. Do you notice any patterns?

4. What is your estimate for Gamestop's dividend per share next year? Please justify why you made that decision.

5. Now locate a company that has reduced or eliminated its common stock cash dividend over the past year. Why did the company reduce or eliminate its dividend? What has happened to the company's stock price over the year?

Solution Preview

In accordance with BrainMass rules, this is not a hand in ready assignment but only background help
Step 1
Over the past three years Gamestop's dividend payout, dividend yield, and dividend per share over the past three years have increased.
The dividend payout ratio was 36.7 in 2014, it was minus 37.5 in 2013, and was zero in 2012.
The dividend yield ratio was 3.1 in 2014, 3.2 in 2013, and 0 in 2012.
The dividend per share was 1.1 in 2014, 0.8 in 2013, and 0 in 2012.
The share prices used for calculating the yield was $34.97 in 2014 and $24.8 in 2013. These were the prices closest to the date of the financial statements.
What has happened is that three years ago Gamestop did not pay any dividend. Two years ago it paid a dividend of 0.8 and last year it paid a dividend of 1.1.
The explanation is that during the year ended 2013 there was an unusual expense of $680.7 million incurred by Gamestop. This reduced led to a net loss of $269.70 million to the company. Even though the diluted earnings per share of the company was minus 2.13, the company paid a dividend of 0.80. Even though the net change in cash was negative, ...

Solution Summary

This solution explains Gamestop dividends. The sources used are also included in the solution.

$2.19