November 30, 2025 a 07:46 am
BBY: Dividend Analysis - Best Buy Co., Inc.
Best Buy Co., Inc. presents an intriguing dividend profile characterized by a robust dividend yield of 4.79% amidst a consistent dividend history spanning 23 years. While the company reflects a last dividend cut in 2017, it maintains a solid commitment to providing shareholder returns through dividends. This analysis will delve deeper into the various aspects of Best Buy's dividend practices and overall financial health.
📊 Overview
Examining Best Buy Co., Inc.'s sectoral positioning, dividend yields, and historical performance offers key insights into its market reputation as a reliable dividend payer.
| Aspect | Details |
|---|---|
| Sector | Consumer Electronics |
| Dividend yield | 4.79% |
| Current dividend per share | 3.75 USD |
| Dividend history | 23 years |
| Last cut or suspension | 2017 |
📈 Dividend History
The dividend history indicates a consistent increase in dividends over the years, demonstrating Best Buy's commitment to returning value to shareholders, which is crucial for assessing long-term investment stability.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 3.80 |
| 2024 | 3.76 |
| 2023 | 3.68 |
| 2022 | 3.52 |
| 2021 | 2.80 |
📈 Dividend Growth
Dividend growth is indicative of the company’s growing profitability and ability to sustain higher payouts, thereby enhancing shareholders' wealth over time.
| Time | Growth |
|---|---|
| 3 years | 10.33% |
| 5 years | 13.46% |
The average dividend growth is 13.46% over 5 years. This shows moderate but steady dividend growth.
⚠️ Payout Ratio
Understanding the payout ratio helps review the sustainability of the company's dividends, where a high ratio might indicate financial instability if not supported by earnings or cash flow.
| Key figure | Ratio |
|---|---|
| EPS-based | 122.50% |
| Free cash flow-based | 52.04% |
The EPS-based payout ratio of 122.50% is relatively high, indicating that dividends exceed earnings, which may be a concern for sustainability. However, the FCF-based ratio of 52.04% is more moderate, reflecting potential coverage from cash flow.
💵 Cashflow & Capital Efficiency
Analyzing cash flow figures and capital efficiency ratios provides a clear picture of the company’s financial health and ability to maintain and grow dividend payments without straining financial resources.
| Metric | 2025 | 2024 | 2023 |
|---|---|---|---|
| Free Cash Flow Yield | 7.53% | 4.10% | 4.67% |
| Earnings Yield | 5.02% | 7.53% | 7.41% |
| CAPEX to Operating Cash Flow | 33.65% | 54.08% | 50.99% |
| Stock-based Compensation to Revenue | 0.33% | 0.33% | 0.30% |
| Free Cash Flow / Operating Cash Flow Ratio | 66.35% | 45.92% | 49.01% |
These metrics illustrate Best Buy’s stable cash flow position, ensuring stable dividends and further investments into the business, with a strong emphasis on maintaining capital efficiency.
🔍 Balance Sheet & Leverage Analysis
Reviewing leverage and balance sheet ratios enables understanding of financial risk and the company's capacity to manage debt, particularly essential during economic downturns.
| Metric | 2025 | 2024 | 2023 |
|---|---|---|---|
| Debt-to-Equity | 1.44 | 1.30 | 1.42 |
| Debt-to-Assets | 27.42% | 26.61% | 25.17% |
| Debt-to-Capital | 59.07% | 56.60% | 58.73% |
| Net Debt to EBITDA | 1.12 | 0.98 | 0.77 |
| Current Ratio | 1.03 | 0.99 | 0.98 |
| Quick Ratio | 0.39 | 0.37 | 0.41 |
| Financial Leverage | 5.26 | 4.90 | 5.65 |
Best Buy's balance sheet remains leveraged but manageable, with ratios indicating a secure position against potential financial stress, bolstered by strong liquidity ratios.
💪 Fundamental Strength & Profitability
Assessing profitability margins and return ratios highlights the company’s ability to generate earnings, manage expenses, and yield favorable returns for stakeholders.
| Metric | 2025 | 2024 | 2023 |
|---|---|---|---|
| Return on Equity | 33.01% | 40.65% | 50.77% |
| Return on Assets | 6.27% | 8.29% | 8.98% |
| Net Margin | 2.23% | 2.86% | 3.06% |
| EBIT Margin | 3.24% | 3.85% | 3.94% |
| EBITDA Margin | 5.33% | 5.97% | 5.92% |
These figures underscore Best Buy's robust profitability profile, exhibiting efficient operational practices and successful cost management, which are crucial for sustaining future dividends.
📈 Price Development
✅ Dividend Scoring System
Evaluating various aspects of Best Buy’s dividend program reveals its strengths and areas for improvement, contributing to a comprehensive strategic view for investors.
| Category | Score | Score Gauge |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 5 | |
| Dividend growth | 4 | |
| Payout ratio | 3 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 4 |
Total Score: 32/40
🗣️ Rating
In conclusion, Best Buy Co., Inc.'s dividend profile is robust, backed by a strong history, moderate growth, and consistent payout strategies. Despite a high EPS-based payout ratio, its sound financial stability and cash flow support its dividend strategy, making it an attractive consideration for dividend-focused investors.