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Why Target (TGT) is a Top Dividend Stock for Your Portfolio
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Target in Focus
Headquartered in Minneapolis, Target (TGT - Free Report) is a Retail-Wholesale stock that has seen a price change of 5.96% so far this year. Currently paying a dividend of $1.12 per share, the company has a dividend yield of 2.97%. In comparison, the Retail - Discount Stores industry's yield is 0.98%, while the S&P 500's yield is 1.53%.
Looking at dividend growth, the company's current annualized dividend of $4.48 is up 2.8% from last year. In the past five-year period, Target has increased its dividend 5 times on a year-over-year basis for an average annual increase of 15.57%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Target's payout ratio is 45%, which means it paid out 45% of its trailing 12-month EPS as dividend.
TGT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $9.53 per share, representing a year-over-year earnings growth rate of 6.60%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that TGT is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why Target (TGT) is a Top Dividend Stock for Your Portfolio
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Target in Focus
Headquartered in Minneapolis, Target (TGT - Free Report) is a Retail-Wholesale stock that has seen a price change of 5.96% so far this year. Currently paying a dividend of $1.12 per share, the company has a dividend yield of 2.97%. In comparison, the Retail - Discount Stores industry's yield is 0.98%, while the S&P 500's yield is 1.53%.
Looking at dividend growth, the company's current annualized dividend of $4.48 is up 2.8% from last year. In the past five-year period, Target has increased its dividend 5 times on a year-over-year basis for an average annual increase of 15.57%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Target's payout ratio is 45%, which means it paid out 45% of its trailing 12-month EPS as dividend.
TGT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $9.53 per share, representing a year-over-year earnings growth rate of 6.60%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that TGT is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).