[adventured]

Interest rates are the last thing Dollar General needs to worry about at this point.

$1.2 billion in profit on $22 billion in sales. They have $2.6 billion in long-term debt, paying ~$100m in annual interest on their total debt.

They could afford a 15% interest rate on their debt.

With their income, they have no need to borrow to build out stores. Their dividend is modest, so that's also no concern vs their need to spend to build.

[Spooky23]

Dollar General is a refinement of Ray Kroc’s McDonalds model for passive investors. Their magic is net leasing in shitty areas with barebones stores, so they don’t hold many obligations on their balance sheet, and don’t spend a lot on building upkeep and taxes. It is basically a ground lease and a bond alternative.

That works because it’s an investment that lets passive investors yield 5-7%, which is a good yield from a company with a good credit rating.

As rates rise, it gets less and less attractive, especially as leases start maturing, growth slows, and you need to put capital dollars into cheap buildings that you don’t own. It’s not a bad company, but it’s no Walmart.