In This Article:
Investigating the Sustainability of Target Corp's Dividend Payments
Target Corp(NYSE:TGT) recently announced a dividend of $1.1 per share, payable on 2024-03-10, with the ex-dividend date set for 2024-02-20. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Target Corps dividend performance and assess its sustainability.
What Does Target Corp Do?
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Target serves as the nation's sixth-largest retailer, with its strategy predicated on delivering a gratifying in-store shopping experience and a wide product assortment of trendy apparel, home goods, and household essentials at competitive prices. Target's upscale and stylish image began to carry national merit in the 1990sa decade in which the brand saw its top line grow threefold to almost $30 billionand has since cemented itself as a top U.S. retailer. Today, Target operates over 1,900 stores in the United States, generates over $100 billion in sales, and fulfills over 2 billion customer orders annually. The firm's vast physical footprint is typically concentrated in urban and suburban markets as the firm seeks to attract a more affluent consumer base.
A Glimpse at Target Corp's Dividend History
Target Corp has maintained a consistent dividend payment record since 1972, distributing dividends on a quarterly basis. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 52 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Target Corp's Dividend Yield and Growth
As of today, Target Corp currently has a 12-month trailing dividend yield of 2.91% and a 12-month forward dividend yield of 2.94%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, Target Corp's annual dividend growth rate was 15.10%. Extended to a five-year horizon, this rate decreased to 9.40% per year. And over the past decade, Target Corp's annual dividends per share growth rate stands at 9.30%.
Based on Target Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Target Corp stock as of today is approximately 4.56%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-10-31, Target Corp's dividend payout ratio is 0.55.