Buy This Dividend-Paying Retailer Instead of Amazon.com

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Amazon.com (NASDAQ: AMZN) has done nothing but grow under the guidance of founder, chairman, CEO, and president, Jeff Bezos.
No let-up is in sight.
Most of Wall Street expects Amazon.com to record 20%-plus revenue and earnings growth through at least 2021.
Few companies can keep pace with Amazon.com on growth. Certainly, no retailer – internet or otherwise – in the domestic market.
Why, then, should you prefer eBay (NASDAQ: EBAY) over Amazon.com?
Price is what you pay, value is what you receive.
You pay a hefty price to receive Amazon.com’s value. Its shares trade at 75 times the consensus 2019 earnings-per-share (EPS) estimate of $24.
The forward estimate is more reasonable when we focus on 2020. The consensus estimate is “only” 55 times the EPS estimate of $33.
eBay stock, in contrast, trades at 14.6 times EPS estimates of $2.75 this year.  It trades at 13 times the 2020 EPS estimate of $3.10.
Everyone concedes that Amazon.com deserves the higher multiple. I still prefer eBay over Amazon.com.
For one, it’s personal.
Everything I want to buy at Amazon.com I can buy at eBay. I frequently find that eBay sellers offer better prices for the same products. What’s more, eBay refuses to browbeat me into a “Prime” membership like Amazon.com.
But we’re talking investing, not shopping.
I prefer to pay a lower multiple for earnings than a higher multiple. A company can more easily exceed expectations when its shares trade at 13 times forward earnings estimates than 55 times forward estimates.
Amazon.com is priced for perfection. Nothing lasts forever (including perfection).
Every company eventually reaches critical mass. The earnings and revenue gallop cedes to a leisurely trot (see Walmart and Apple).
The dividend is the deciding factor, though.
eBay stock pays a dividend. It’s also a dividend initiator, having paid its first quarterly dividend on March 20.  Amazon.com pays no dividend.
Dividend initiators are worth a closer look. Ned Davis Research vetted the data.
Dividend initiators generated a 9.6% average annual return over the 46 years from January 1972 through December 2018. Dividend non-payers generated only a 2.4% annual average return.
Why do dividend initiators generate higher returns?
Many morph into dividend growers. As the dividend goes, so goes the share price.
I see nothing but dividend growth in eBay’s future. The business faithfully generates $2 billion in annual operating cash. Free cash flow (operating cash flow minus capital expenditures) also tops $2 billion annually.
But what about the here-and-now?
eBay declared its first quarterly dividend on Jan. 29. Investors have approved of the new policy.
eBay stock is up 17.5% since announcing it would pay a quarterly. Non-dividend-paying Amazon.com’s shares are up 7.8%.

To be sure, investor enthusiasm for Amazon.com’s exceptional growth could return. Amazon.com could pull ahead of eBay. There are no guarantees.
Then again, Amazon.com could continue to lag eBay.
More investors are uneasy these days, and for good reasons: The yield curve has inverted (a historical precursor to a recession). The U.S.-China trade war has diminished growth expectations.
Sometimes dividends are all you have.
From 2000 to 2009, a period addled by a couple of recessions, the S&P 500 depreciated. Dividends were the lone source of return for many investors.
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