RCI Hospitality Holdings, Inc. RICK has rewarded investors with a 16.7% hike in its quarterly cash dividend.

The board of directors approved a quarterly dividend payout of 7 cents per share (28 cents per share annually), up from the previous dividend payout of 6 cents per share (24 cents per share annually). The amount will be paid out on Sep. 30, 2024, to shareholders of record as of Sep. 16. Based on the closing price of $43.92 per share on Sep. 3, the stock has a dividend yield of 0.6%.

RCI Hospitality’s strategic capital allocation efforts, healthy balance sheet and leverage from increased top line aided it in undertaking this decision.

Here’s What Aiding RICK’s Dividend Policy

RCI Hospitality is consistently focusing on ways to effectively allocate its excess capital through share repurchases and dividend payments to enhance shareholder value. The company is trying to utilize excess cash to foster its growth in the near and the long term. Besides, RICK is prudent enough to capitalize on growth opportunities that are accretive to its shareholders.

As part of its capital allocation strategy, at the end of the third quarter of fiscal 2024, RCI Hospitality’s board of directors authorized the increase of the amount available under its share repurchase program by $25 million. The company has tackled the adverse impacts of the pandemic and post-pandemic scenario with two successful acquisitions. It is now focusing on seeking opportunities to increase free cash flow per share and return value to its investors.

Besides its financial highlights, RICK is benefiting from its top-line growth, which enables it to maintain its shareholder value. During the nine months ended June 30, 2024, the company witnessed improved performance across its reportable segments despite some market bumps. The contributions from its Nightclubs segment increased year over year due to newly acquired clubs. The contributions from the Bombshells segment were somewhat driven by an increase in new locations.

Going forward, RCI Hospitality aims to focus on a five-year strategic plan starting in fiscal 2025 that integrates two pillars. It aims to continue its Back to the Basics approach to the business and have approximately $250 million of free cash flow to deploy. About 10% of the discretionary free cash flow is expected to be deployed for a stable and modestly growing dividend. In the long term, the company expects to witness a free cash flow compound annual growth rate of 17.2%.

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RICK’s shares have lost 2.6% in the past three months compared with the Zacks Leisure and Recreation Services industry’s 3.7% decline. Although shares trended downward in the said time frame, the ongoing strategic initiatives and strength in its business segments will likely foster growth in the upcoming period.

RICK’s Zacks Rank & Key Picks

RCI Hospitality currently carries a Zacks Rank #3 (Hold).

Here are some better-ranked stocks from the Consumer Discretionary sector.

Royal Caribbean Cruises Ltd. RCL currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

RCL has a trailing four-quarter earnings surprise of 18.5%, on average. The stock has gained 62.2% in the past year. The Zacks Consensus Estimate for RCL’s 2024 sales and earnings per share (EPS) indicates growth of 18.1% and 69.9%, respectively, from the year-ago levels.

DoubleDown Interactive Co., Ltd. DDI currently sports a Zacks Rank of 1. DDI has a trailing four-quarter earnings surprise of 22.1%, on average. The stock has increased 42.6% in the past year.

The Zacks Consensus Estimate for DDI’s 2024 sales and EPS indicates an increase of 12.6% and 15.8%, respectively, from the year-ago levels.

Norwegian Cruise Line Holdings Ltd. NCLH currently sports a Zacks Rank of 1. NCLH has a trailing four-quarter earnings surprise of 5.7%, on average. The stock has rallied 6.2% in the past year.

The Zacks Consensus Estimate for NCLH’s 2024 sales and EPS indicates an increase of 9.8% and 122.9%, respectively, from the year-ago levels.

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