Target (TGT) gave income investors something to cheer about Wednesday, when the discount retailer announced another dividend hike, extending its long streak of annual increases.
The 1.8% increase brings Target's quarterly dividend to $1.12 per share, or $4.48 per share on an annual basis. This works out to be less than half of analysts' expected earnings of $9.35 for the full fiscal year. The next dividend is payable on September 10 to shareholders of record at the close of business on August 21.
Impressively, this latest hike marks the 53rd consecutive year in which Target has raised its annual dividend payment.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Why Target's dividend hike matters to investors
Businesses with dependable dividend growth are important for several reasons. For one, "companies that raise their payouts like clockwork decade after decade can produce superior total returns (price change plus dividends) over the long run, even if they sport apparently ho-hum yields to begin with," writes Dan Burrows, senior investing writer at Kiplinger, in his feature on the best dividend stocks for dependable dividend growth.
Additionally, dividend growers offer some peace of mind to investors. "After all, any company that manages to raise its dividend year after year – through recession, war, market crashes and more – is demonstrating both its financial resilience and its commitment to returning cash to shareholders," Burrows adds.
Target's decades-long streak of consistent dividend growth has it included in the Dividend Aristocrats, the best dividend stocks in the S&P 500 that have consistently raised their annual payouts for 25 straight years. Only 67 companies make the list.
Is Target stock a buy, sell or hold?
The consumer staples stock has underperformed on the price charts this year, up 4% on a total return basis vs the S&P 500's 13% gain. Still, Wall Street is bullish. According to S&P Global Market Intelligence, analysts' average target price for TGT is $174.45, representing implied upside of over 18% from current levels. Additionally, the consensus recommendation is Buy.
Argus Research analyst Chris Graja is one of those with a Buy rating on Target and an above-average $200 price target.
"We believe that Target remains very relevant to its customers as a place where they can get food and staples at good prices, and stylish, budget-friendly clothing and home goods," Graja said in a May 24 note. The company has earned its status as a "go-to" retailer, the analyst adds, and any weakness in the stock offers a buying opportunity.
Related Content
-
Snowbirds: Avoid These 3 Sneaky Insurance IssuesBefore snowbirds depart for their winter retreat, they should check their insurance coverage for surprises that might arise, or else be on the hook for repairs.
-
Hang in There With This Value FundPatience is required for investors in the Dodge & Cox Stock Fund, but its long-term outperformance proves it's worth the wait.
-
Hang in There With This Value Fund
Patience is required for investors in the Dodge & Cox Stock Fund, but its long-term outperformance proves it's worth the wait.
-
8 Dividend Funds to Consider NowThese dividend funds deliver a diversified portfolio of dividend stocks.
-
I'm a Financial Planner: Here's How to Make the Most of Your Charitable Giving on a BudgetMaximizing the charitable donations you plan to make this year can help your financial plan stay on track and help give the most to the causes you care about.
-
I'm a Wealth Planner: These 3 Steps Can See You and Your Heirs Through a Wealth TransferBoth givers and receivers need to be seriously strategic about communicating, understanding tax efficiency and leveraging smart money moves.
-
Dow Adds 314 Points to Thanksgiving Rally: Stock Market TodayInvestors, traders and speculators enjoy the best Thanksgiving Week gains for the major stock market indexes in more than a decade.
-
Unwrapping Your Estate Plan for Your Kids: A Gift That'll Keep Giving Long After the HolidaysThe holidays offer families a perfect opportunity to discuss important, often difficult topics like long-term care, estate plans and legacy.
-
5 Ways to Teach Your Kids About Giving Back, From a Financial PlannerTeaching kids generosity goes beyond simple rules and can involve fun, practical strategies, such as letting them lead giving, volunteering together and more.
-
I'm a Financial Planner: Here's How You Can Use AI to Improve Your FinancesApps can help with budgeting, saving and investing, financial coaching and debt management. But providing your personal information can also raise your risks.
