VF Corp. (VFC) is a worldwide apparel and footwear company. Founded in 1899, VF is now a $27 billion (by market cap) apparel titan that employs more than 33,000 people. Some of VF’s most important and recognizable brands include: Vans, The North Face, Timberland, and Supreme. The Supreme acquisition closed in late 2020 for $2.1 billion. The company has three segments: Outdoor, 45% of FY 2021 revenue; Active, 45%; and Work, 10%. Revenue geography is nicely diversified. 50% of FY 2021 revenue came from the US; 50%, international. Channels are also diversified.

Wholesale accounted for 55% of FY 2021 revenue, while the other 45% came from direct-to-consumer sales. VF has multiple clothing types for multiple clothing settings locked down. Whether it’s for work or play, they cover it with high-quality options across their branded portfolio. And with their large DTC channel, they’re already ahead of the e-commerce curve. They’re providing products on their customers’ terms. Apparel is one of my favorite business models to invest in. I say that because they’re providing a necessary product to society.

You can’t go around without clothing and footwear. And while you certainly don’t have to buy your clothing or footwear from VF, their brand strength gives them a leg up on a lot of the competition. Indeed, VF has increased its dividend for 48 consecutive years. They’re a Dividend Aristocrat. Actually, they’re a Dividend Aristocrat nearly twice over. The five-year dividend growth rate is 9.0%. And that high-single-digit dividend growth is paired with the stock’s yield of 2.9%. We’re looking at a yield-and-growth combination that’s in the double digits here. That 2.9% yield, by the way, handily beats the market. Providing necessary products to an ever-larger pool of global customers, at ever-higher prices, is a recipe for ever-higher profits. And that should naturally lead to ever-higher dividends. Morningstar rates VFC as a 3-star stock, with a fair value estimate of $66.00. CFRA is another professional analysis firm, and I like to compare my valuation opinion to theirs to see if I’m out of line. They similarly rate stocks on a 1-5 star scale, with 1 star meaning a stock is a strong sell and 5 stars meaning a stock is a strong buy. 3 stars is a hold. CFRA rates VFC as a 5-star “STRONG BUY”, with a 12-month target price of $80.00. I came in a bit high this time around. Averaging the three numbers out gives us a final valuation of $76.76, which would indicate the stock is possibly 13% undervalued. Bottom line: VF Corp. (VFC) is a high-quality apparel company with some of the best brands in its entire industry.

With a market-beating yield, nearly 50 consecutive years of dividend increases, high-single-digit long-term dividend growth, and the potential that shares are 13% undervalued, this Dividend Aristocrat looks highly worthy of attention, if not capital, right now.

Note from DTA: How safe is VFC’s dividend? We ran the stock through Simply Safe Dividends, and as we go to press, its Dividend Safety Score is 80. Dividend Safety Scores range from 0 to 100. A score of 50 is average, 75 or higher is excellent, and 25 or lower is weak. With this in mind, VFC’s dividend appears Safe with an unlikely risk of being cut. Learn more about Dividend Safety Scores

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