Affordable Luxury Bounces Back
Twenty-eight-year-old Rob walks through a bustling mall during the holiday season looking for a gift for his girlfriend.
He generally knows her style and thinks a simple necklace will fit.
He hits an intersection and two stores catch his eye on opposite corners — Jared Galleria of Jewelry and Kay Jewelers.
This is where he’s stumped. He’s unsure which one to choose.
He’s seen both in commercials: “Every kiss begins with Kay” and “It can only be Jared.”
Rob decides to try Kay first. Jared seems more expensive.
What Rob probably doesn’t realize is both Jared and Kay are owned by the same company: Signet Jewelers Ltd. (NYSE: SIG).
And even better, you have the ability to benefit from this little-known faux competition.
Let me explain…
The Jewelry Titan
Signet Jewelers Ltd. is the world’s largest retailer of diamond jewelry, with nearly 3,500 stores worldwide.
It owns subsidiaries such as Zales, Jared and Kay — as well as several U.K. chains.
Wedding rings aren’t going away, and neither is trendy fashion.
Signet has found its niche in the “affordable luxury” sector — allowing it to tap into the middle class. Many don’t have the means to shell out a couple hundred every time they want to buy a gift. And Signet bridges this gap.
Furthermore, their public exposure allows them to make even more on the back end than a normal jewelry store would.
Between appraisals, repairs, financing and insurance, stores are able to bring in much more per sale than a mom and pop jeweler would.
And right now, you have a chance at getting a piece of this company at a massive discount…
Once worth over $150 per share in 2015, Signet took a long tumble — facing a changing industry and litigation for multiple offenses.
Since 2015, they got a new CEO who has helped them push into the e-commerce sector.
And after a long tumble from its 2015 highs, Signet looks like it’s finally found a long bottom…
Better yet, as of this writing Signet has a fat annual dividend payout of around 6%.
For comparison, Tiffany & Co. pays out less than 2% annually.
Since January 2014, Signet has consistently increased dividend payouts five times — more than doubling the cash payout from $0.15 to $0.37 per share today.
I expect this company to be around for a long time…
It’s shown the ability to adapt to a changing industry with an increase in e-commerce sales. And it’s the most dominant force in a sector that isn’t going away anytime soon.
On Jan. 16, SIG had one of its best days in the history of the company on the positive reporting of its 2019 holiday season.
This has the possibility to be just the beginning for SIG and could be the bounce the company needs.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch