Target: The Best Dividend Aristocrat

Focus: CONSUMER

Bob Ciura Image Bob Ciura Contributing Editor, Wyatt Investment Research

On the surface, they may be boring. But dividend aristocrats—which have increased their dividends for 25 years in a row or longer—have been the biggest creators of wealth in the last century, explains Bob Ciura, editor of Daily Profit.


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Discount retail giant Target (TGT) is one dividend aristocrat that has increased its dividend for more than 40 years in a row. This is a difficult time for retailers due to declining mall traffic, and the threat of e-commerce. As a result, Target shares have lost 25% of their value this year. But that decline makes now the perfect opportunity to buy Target. The stock is cheap, the company has a plan to return to growth, and the share price decline has lifted the dividend yield to a hefty 4.6%.

For retailers like Target, the most important financial metric is arguably comparable-store sales. This measures sales at stores open at least one year.

It is a critical performance metric, that shows whether a retail brand is strong enough to sustain growth after the honeymoon period of a new store opening comes to an end.

Many retailers are reporting declining comparable sales, which has prompted store closures across the industry.  In response, Target launched an aggressive turnaround strategy.

It is investing heavily to redevelop and modernize its stores, and is also opening dozens of smaller stores.

 
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