This is because Williams-Sonoma's higher revenue base led to a 370-basis point year-over-year expansion in net margin to 13.7%. What's more, the company's adjusted diluted EPS skyrocketed 64.3% higher year-over-year to $14.85 in 2021 (details per Williams-Sonoma's Q4 2021 earnings press release). This helps to explain how Williams-Sonoma's comparable brand revenue growth surged 22% higher year-over-year (figure according to Williams-Sonoma's Q4 2021 earnings press release). This is significant because Alber went on to point out these customers generate 3x to 4x more revenue than the single brand customer.

What drove this incredible net revenue growth for Williams-Sonoma?Īs President and CEO Laura Alber noted in her opening remarks during the company's recent earnings call, a record-high 60% of Williams-Sonoma's 2021 sales came from cross-brand customers. The company recorded $8.25 billion in net revenue in 2021, which was good enough for a 21.6% growth rate against the year-ago period (data sourced from Williams-Sonoma's Q4 2021 earnings press release). Williams-Sonoma executed flawlessly in 2021, which is what allowed the company to report tremendous earnings results for shareholders during the year. Williams-Sonoma Q4 2021 Earnings Press Release Williams-Sonoma's Fundamentals Remain Strong Coupled with the fact that analysts are predicting 11%-plus annual earnings growth over the next five years, I believe an 8.25% annual dividend growth rate is a reasonable expectation for the stock. Williams-Sonoma's dividend payout ratios leave room for the company to grow its dividend moderately ahead of earnings for the foreseeable future. Compared to the $3.05 in dividends per share that are slated to be paid this year, that is equivalent to a 20.9% adjusted diluted EPS payout ratio. This works out to an adjusted diluted EPS payout ratio of just 16.3%.Īnd the average analyst estimate is $14.59 in adjusted diluted EPS for 2022 (which I think will prove to be too low since Williams-Sonoma has a history of handily beating analysts' estimates). Williams-Sonoma generated $14.85 in adjusted diluted EPS during 2021 while it paid out $2.42 in dividends per share during that time. While this can signal that a dividend may be at risk, it doesn't always give the complete story. Williams-Sonoma's 1.89% dividend yield is more than double the specialty retail industry average of 0.84%. But can the stock keep such a rapid dividend growth rate going? Williams-Sonoma boasts an impressive five-year annual dividend growth rate of 11.9%.

A Robust Dividend Growth Reputation That Should Continue I'll discuss a few reasons for my strong buy rating and go into the major risks facing the stock. That's why the stock price has nearly quadrupled, and its dividend has doubled since making it the first position within my dividend growth stock portfolio in 2017.īut I believe there is quite a bit of capital appreciation and dividend growth left in Williams-Sonoma's future. Williams-Sonoma ( NYSE: WSM) is one quality stock that derives a significant majority of its sales from e-commerce. This is supported by the fact that analysts anticipate total e-commerce sales will rise from $5.5 trillion in 2022 to $7.4 trillion by 2025. Global e-commerce is undoubtedly a promising industry. What's the most surefire strategy to build generational wealth? I would argue that the answer is to allocate capital to dominant stocks in industries with a lengthy growth runway ahead. Marko Geber/DigitalVision via Getty Images Young couple doing online Christmas shopping

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