1 Great Dividend Opportunity

As investing junkies, we find ourselves constantly on the lookout for the next great opportunity. With the market a mess and the wider world looking less and less inviting, investors need to deploy their capital with the utmost discipline these days.

Face it, risk abounds at present. However, such moments come with a silver lining: They tend to drive down the prices of great companies. It's exactly at moments like these, when cooler heads prevail, that your portfolio can pick up its next long-term winner. I believe I've found one such opportunity, which I'll detail for you today.

At first thought, the ultra-fickle teen retail sector might seem like an area to avoid like the plague in today's weak-consumer environment. However, when you look past the surface, retail rock star Buckle (NYS: BKE) appears to offer everything an investor could ask for.

Buckle up!
In many ways, Buckle seems the exception to the rule. In the era of the absentee consumer, a time that's witnessed consumers either cutting spending or moving down the value chain to lower-end retailers like Wal-Mart (NYS: WMT) , Buckle has a growth story firmly in place. Since the Great Recession began in 2008, the company grew revenue an impressive 61%. Over the last two years, the company also produced average same-store sales growth, a key metric in the retail field, of 3% at a time when its peers tallied either negative or flat SSS growth.

And even sweeter, Buckle manages to achieve this relatively strong growth and still maintain some incredibly strong margins for the retail industry. In fact, it consistently beats its peers across the board from the top line on down.

Buckle 49.6% 22% 14.1%
Zumiez (NAS: ZUMZ) 36.4% 9.7% 6.2%
American Eagle Outfitters (NYS: AEO) 38.5% 10% 5.7%
Abercrombie & Fitch (NYS: ANF) 63.9% 9.5% 5.3%
Aeropostale (NYS: ARO) 38.4% 11.8% 6.8%
Pacific Sunwear of California (NAS: PSUN) 38.9% (8.2%) (10.1%)

Source: S&P Capital IQ.

Buckle easily leads the field over the last 12 months. Only Abercrombie bests its gross margin, but unlike Buckle, Abercrombie doesn't see that benefit flow through to the bottom line. Buckle, on the other hand, starts with a high gross margin and maintains it beautifully, a rarity in the notoriously low-margin retail business.

Moving on, Buckle's balance sheet looks about as rock solid as you'll find in any industry. The company carries no long-term debt. Zip. Zero. In fact, it has enough cash and short-term equivalents to pay off all its liabilities. The fact that Buckle demonstrates the ability to tally these impressive performances in a pretty adverse business climate makes it all the more impressive to me. However, Buckle's story reaches its most compelling point when you examine two other key figures.

The icing on the cake
Compelling to begin with, Buckle is also a dividend dynamo that yields an impressive 6.7%. In a period in which interest rates sit around historical lows, a company offering such an impressive payout catches my eye. Considering that the S&P 500 currently yields 2%, and even that seems a somewhat appealing option, Buckle's prodigious payout looks nothing short of impeccable. Much of Buckle's eye-popping yield comes from special dividends that the board of directors first initiated in 2008. Buckle's management and board keep things pretty simple. They aim to reward their shareholders to the greatest degree possible. If they have the cash on hand and no promising opportunities present themselves, they'd just as soon give it back to shareholders. Great managements know how to properly reward shareholders. This kind of "use it if we need it, distribute it if we don't" attitude should help ensure the long-term health of the company while keeping the checks headed in shareholders' direction for some time to come. Talk about a winning combination.

Equally intriguing, insiders own a significant portion of the company -- 43.4% of total shares outstanding, to be exact, or roughly $924 million worth of stock. We love companies whose management "eats its own cooking." It's the ultimate alignment of interests for the individual investor, and for good reason. Management teams that are also shareholders clearly have a vested interest in creating shareholder value, since their performance impacts their own pocketbooks in a big way.

Foolish bottom line
So what do we have here?

On a fundamental level, Buckle appears to have an extremely healthy business, the kind investors covet even in good times. Given that times appear anything but good at present, I take even more heart in the fact that this company can still grow when the going gets tough. The company is essentially devoid of balance sheet risk. Even in a low-growth era, its massive dividend should more than compensate for any lack in earnings growth (although analysts project 11% growth over five years for Buckle), with a well-incentivized management team watching your back. In summary, this is exactly the kind of dividend stock investors should want to own.

Given all this, I think the better question is: What's not to like? While every investor needs to decide on which stocks work best for his or her individual circumstances, I think Buckle looks about as good as it gets. We Fools understand we need to watch one another's backs as well. We just completed a report detailing how to "Secure Your Future With 11 Rock-Solid Dividend Stocks." I invite you to pick up your free copy today. Just click here to access your free copy now.

At the time this article was published Fool contributor Andrew Tonner holds no financial position in any of the companies mentioned in this article. The Motley Fool owns shares of Wal-Mart Stores and Aeropostale. Motley Fool newsletter services have recommended buying shares of Wal-Mart Stores and Zumiez. Motley Fool newsletter services have recommended creating a diagonal call position in Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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