The Open Road and More Dollar Stores than I Could Count

Kelly Green
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March 5, 2025
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I set off from Port St. Lucie, Florida, on my motorcycle last Thursday headed for Memphis, Tennessee. I had three days to travel and catch my flight back to Ft. Lauderdale on Sunday morning. The 910-mile journey took longer than planned as I hopped off the highway to explore the states I rode through.

I rode through a lot of historic towns with interesting buildings that I marked on my map for later investigation. Bainbridge and Blakely, Georgia, are standouts on my short list. I will make the trip again in a few weeks with my Miata. I have to decide whether to explore those places further or cruise new roads and experience new towns.

As I took everything in, I noticed the lack of big box retailers and grocery stores and the sheer number of dollar stores that I passed. I even saw a Dollar General Market that offers fresh meats, produce, dairy, and other food offerings not found at the traditional Dollar General stores.

I don’t wear headphones or have speakers on my bike. It frees my brain to think about consumer trends and the economics of these small towns. And then, of course, if we could collect dividends from any of these chains.

Being Thrifty Is Cool

The first Dollar General store was founded by James Luther Turner in 1955. During the Great Depression, Turner began buying and liquidating bankrupt general stores. From there he opened a wholesale business. By 1955, he made the switch to retail with the concept that no item in the store would cost more than $1. In 1959, Leon Levine had a similar idea for Family Dollar, but his price point was $2.

Over the past few years, I’ve talked about how bullish I am on white label brands and other staples that offer consumers high value at a lower price.

SpartanNash (SPTN) is a company focused on artisanal white label brands that pays a 4.2% dividend yield. And it’s one of the reasons I’ve been watching the slide in Target’s (TGT) share price in recent years. Target has more than 45 of what it calls “owned brands.” And right now, you could lock in a 3.8% dividend yield. That’s great for this retail giant.

Companies like Dollar General (DG) and Dollar Tree (DLTR) also have their own brands as well as discounted name brands. These stores are among the few options in small towns across America. They let locals shop for staples without a long drive to a larger town.

And there’s another group of shoppers at these stores—people hopping on social media trends. There are TikTok and Instagram channels dedicated to making meals using only ingredients from these stores. Other channels advise shoppers on how to find the best “dupes” of more popular products at DG or DLTR.

No matter what the motivation, these stores have been thriving since the ‘50s. So, of course, I wanted to know if any of them are a good investment right now.

Only One Pays a Dividend

The three stores I was interested in were Dollar General, Dollar Tree, and Family Dollar. In 2015, Dollar Tree acquired Family Dollar, so we’re left with two companies. Unfortunately, Dollar Tree never has and still doesn’t pay a dividend. This means if we’re looking for yield, we have to look at DG.

Funny enough, DG started paying a dividend in 2015 and has been increasing its payments since. I’ve looked at the company before, but its yield hasn’t been high enough to warrant my attention.

Shares are down 2.6% so far this year, and down 50% in the past year, which has pushed its yield up to 3.3%. The price decline reflects DG’s struggle to compete with Walmart pricing, Amazon same-day delivery, and grocery delivery services in urban settings. Operating margins have been collapsing at a significant pace.

Is the company headed for failure? Since it pays a dividend, we know that it has some money to free up if finances get too dire. But that would be bad news for DG’s dividend. Obviously, we don’t want to buy a stock where the dividend looks shaky.

The company has been going “back to the basics” over the past few years, which is usually a good sign for long-term stability. I don’t think Dollar General is a buy just yet. But if its yield hits 3.5%, I’ll be tempted to add shares to my portfolio. I’m definitely adding this one to the watchlist.