Target Corp. (TGT) was founded in 1902, and after a failed bid to expand into Canada, has operations solely in the US market. Its business consists of about 1,850 big box stores, which offer general merchandise and food, as well as serving as distribution points for the company’s e-commerce business, remarks Ben Reynolds, editor of Sure Dividend.
Target should produce more than $100 billion in revenue this year. The company also sports an impressive dividend increase streak of 57 years. Target’s impressive dividend record makes it a member of the elite Dividend Kings list.
The company’s payout ratio sat at 62% of expected earnings for 2025. While this isn’t a particularly low payout ratio, we view the dividend as safe, due in large part to Target’s competitive advantage and recession safety.
Target’s competitive advantage comes from its everyday low prices on attractive merchandise in its guest-friendly stores. The company is able to offer low prices thanks to its large scale. With that said, Target faces intense competition from other top-class retailers like Walmart (WMT), Amazon.com Inc. (AMZN), and Costco Wholesale Corp. (COST).
Target posted third quarter earnings on Nov. 19, 2025, and results were slightly better than expected. Adjusted earnings-per-share came to $1.78, which was seven cents above estimates. Target has grown its EPS at an average annual rate of about 8% during the last decade. But we don’t expect the company to replicate this favorable result in the coming years. Overall, we expect 5% annualized growth from what should be a modest level for 2025.
Based on expected EPS of $7.30 in 2025, Target shares were recently trading at a price-to-earnings ratio of less than 13. Our target P/E ratio is 14. As a result, we believe target to be undervalued at current prices.
But what really stands out about Target stock is its high dividend yield of close to 5%. Target is one of the most high-quality stocks available with a yield approaching 5%. Investors can buy Target stock now, lock in high yields, expect dividend growth in coming years, and wait for valuation multiple expansion.
