Dollar General Corp.’s (NYSE:DG) last earnings release had quite a bit for investors to process, though most of it was pretty solid

At the top of the list was the company’s plan to open 730 new stores and relocate or remodel another 875 this year to keep pressure on rival discounter Dollar Tree Inc (NASDAQ:DLTR). Next year, DG plans to open another 900.

Dollar General currently has 11,800 stores nationwide, so you’re talking about a 14% jump in the number of open stores in just two years. That’s an ambitious plan, and Wall Street took the news well. DG stock was up about 4% on the announcement and is up a good 5% year-to-date.

The company needed to do something. Dollar General lost out in its attempt to buy a third dollar-store rival, Family Dollar Stores, Inc. (NYSE:FDO), to Dollar Tree. So to make up for lost market share to the new combined Dollar Tree-Family Dollar, Dollar General is going on the offensive with the expansion blitz.

Dollar stores have come to fill an important retail niche, particularly since the Great Recession hit seven years ago. With wage growth stagnant, dollar stores have helped working-class and middle-class Americans keep their budgets manageable.

Even Wal-Mart Stores, Inc. (NYSE:WMT) — yes, the mighty, invincible Walmart — has acknowledged the competitive threat that the deep discounters pose to its business. (When Walmart isn’t even cheap enough, you know that times are tough.)

However, I question the wisdom of going on an expansion blitz when there is seemingly already a dollar store on every corner. And yes, I’m also trying really hard to avoid making a cheesy reference to Clint Eastwood’s A Fistful of Dollars.

Ed. note: He failed.

But for now, Dollar General is wildly profitable. In its earnings announcement this week, earnings per share rose 16% and revenues rose a stellar 10%. Some of this was due to expansion, but the crucial same-store-sales metric rose 4.9%.

Guidance for the next quarter was a little lower than Wall Street had expected, but still very solid. Dollar General expects revenue growth of 8% to 9% for the full year.

Dollar General’s margins have also remained stable (see chart), indicating that management has done a decent job of managing its growth and keeping rivals in check. If the dollar-store niche is starting to get saturated, it certainly isn’t showing up in DG’s results yet.

So, where does Dollar General go from here?

The stock is not “cheap,” per se — trading at 22 times trailing earnings and 1.2 times sales. To put that in perspective, Walmart trades for 16.2 times earnings and 0.5 times sales. But I have every reason to believe that DG stock has further to run, at least in the short term.

To start, despite its break-neck expansion efforts, Dollar General is taking its responsibilities to shareholders  seriously. It’s adding $1 billion to its existing share repurchase program, and — even better — it’s initiating a quarterly dividend of 22 cents starting next month. That’s only a 1.2% dividend yield at current prices, but it’s an important start. And once Dollar General slows its store expansion, it will have more cash on hand to boost its payout.

Another thing to keep in mind is that Dollar General is a counter-cyclical stock. If you buy the argument that the U.S. economy is reaching “escape velocity” from the Fed’s accommodative policy, then you probably don’t want to own Dollar General.

But if you share my view — that times remain quite challenging for most of Dollar General’s working and middle-class customers in this era of stagnant wage growth — then Dollar General’s outlook is bright for at least the next several quarters.

Its shoppers may eventually tire of pinching pennies and may want to trade up. But we’re not quite there yet, and we might not be for another couple years.

In the meantime, Dollar General offers a growing business that just initiated a dividend.

Charles Lewis Sizemore, CFA, is the chief investment officer of investment firm Sizemore Capital Management. As of this writing, he was long WMT. Click here to receive his FREE weekly e-letter covering top market insights, trends, and the best stocks and ETFs to profit from today’s best global value plays.