Meet the 4.4% Yielding Stock That's Down 11%. Here's Why Investors Should Take a Closer Look.

A high-yielding dividend stock that's a good value with solid growth potential is a pretty strong combination.

This describes Shoe Station (NASDAQ: SHOE), formerly known as Shoe Carnival, which traded under the ticker SCVL. The company made that rebrand on June 11, and it also has a new direction.

The shoe stock has struggled in 2026. It's down about 11% year to date, hurt by inflation, a more cautious consumer, and some strategic missteps. In the first quarter, net sales dipped 2.5% year over year. The company also booked a net loss of $5.6 million, in sharp contrast to its $9.3 million in net income in the prior-year period. But Shoe Station pays a great dividend, and management has a plan to turn things around.

Image source: Getty Images.

A new strategy

Shoe Station operates two retail chains -- Shoe Carnival and Shoe Station. Its prior plan was to rebrand and reorganize under one banner, phasing out the lower-end Shoe Carnival brand in favor of the higher-end Shoe Station brand.

Neither the market nor the customers warmed up to that strategy, so management decided to keep both brands, while renaming the company after its premium chain.

"Our review confirmed that the Shoe Carnival and Shoe Station banners each serve distinct consumer segments, and that the company is best positioned to operate both banners as permanent, independent components of our portfolio," interim President and CEO Cliff Sifford said in the Q1 earnings report.

While the company will maintain both brands, Shoe Station, which caters to a more affluent, older clientele and is a higher-margin business, will be its long-term growth vehicle.

The company plans to close some underperforming Shoe Carnival stores and convert a few of them to Shoe Stations.

As of the end of Q1, it operated 426 total stores -- 281 Shoe Carnivals and 145 Shoe Stations. The plan is to close 12 to 14 underperforming stores in 2026 and six to 10 more in 2027, most of them Shoe Carnivals. Meanwhile, the company will open three to five new stores in 2027 and eight to 10 more in 2028 -- mostly Shoe Stations.

Acquisitions are part of the plan

Shoe Station is debt-free and has approximately $129.3 million in cash and cash equivalents on its books -- up 39% year over year. Furthermore, cash flow from operations increased to $32.7 million in the quarter.

All of that gives it a solid foundation to raise dividends and return capital to shareholders. It's also a great base from which to make acquisitions, which are part of the growth plan.

"We will also seek to expand our business through strategic acquisitions of other footwear retailers," Sifford said in June.

At the current share price, Shoe Station's dividend has a yield of 4.4%, and its payout ratio is just 34%. It has raised its payouts every year for 13 straight years, and based on its financials, it should be able to keep that streak going.

It is also trading at a dirt-cheap valuation of 10 times forward earnings. Wall Street analysts expect significant growth for Shoe Station stock: Their median 12-month price target of $22 per share would amount to 43% growth.

With all that in mind, this is a perfect time to grab some cheap shares if you are looking for a high-yield dividend grower.

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