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Target: The Only Retail Dividend King Is Rebounding But Competition Is Intense

In my recent article quantitatively screening the Dividend Kings, based on my criteria I identified four stocks that are currently potentially interesting for Dividend Growth Investors. One of these was Target Corporation (TGT). Target is facing intense competition but it is rebounding. The company is a relative newcomer as a Dividend King, having paid a growing dividend for 51 straight years. Importantly, it is the only general retailer that is a Dividend King. Even Walmart (WMT) has only paid a growing dividend for 46 years.

Target has a dividend yield over 3%, a P/E ratio (fwd) of 13.7, which is below the broader market average, a fairly conservative balance sheet, and a long history of growing dividends. Target has faced some recent difficulties. In 2017 the stock price was trading in the low $50s and the dividend yield was over 4%. The top line and bottom lines for Target are now rebounding as has the stock price. But having said that, Target is in a very competitive environment. I think that at the moment the company is making the right moves for opening new markets and for e-commerce, but margins are declining. I think that Target could be a suitable addition to some Dividend Growth Investor portfolios at the right price. However, the stock is fairly valued and there are better choices for investing in Dividend Kings at the moment.

Overview of Target Corporation

Target is a leading general retailer in the U.S. The company operated 1,851 stores at end of Q1 2019. The company also operates the fourth most visited retail website in the U.S. with roughly 25 million unique visitors per month. About 93% of sales are from the physical stores and about 7% of sales are from the e-commerce channel. Target derives almost all of its revenue from the U.S. The company divested its operations in Canada in 2015…

Please read the full article at my profile on Seeking Alpha. To read more about Target: The Only Retail Dividend King Is Rebounding But Competition Is Intense.


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