Target: Consistent Dividend Growth History

Last week, U.S. general merchandiser Target (TGT) increased its dividend by $0.02 or 14% from $0.14 to $0.16 per share. Target's dividend growth history is impressive. Since 1998 Target's dividend has grown at a compounded annual growth rate of 13.5%. Having taken a quick glance at Target's EPS (earnings per share) history since 1998, I would rate Target as an excellent candidate for a dividend growth investor's portfolio.

Target's EPS growth history has been strong and consistent, as it has not decreased in any year over year period for the past 10 years. One share of Target purchased in 1998 would have cost $21, and therefore an investor who bought shares at that time would be garnering a yield of over 3% on their original investment.

Although Target currently yields only 1.2%, they could likely be compared with Walgreen (WAG), as far as past dividend growth and earnings growth goes. TGT and WAG are both low yielding stocks with strong past dividend and earnings growth. They are also both retailers that operate exclusively in the United States. As an investment idea, I like Walgreen much better as I believe convenience-based drug retailing has a strong future due mainly to demographics, as well as other trends such as high energy prices, and changing consumer preferences and time constraints.

Target may not be a bad name to consider adding to my watchlist due to its consistent earnings and dividend growth. It also has a strong brand name and is well-positioned in the U.S. marketplace.

Comments

[Roudy]

I will stick with Wal-Mart since Target caters to the $50K and above salary customer ,according to recent reports. I will make more money with Wal-Mart stock over the long run reinvesting dividends in their stock.
RoudMan

[moneygardener]

I agree with you Roudy. WMT is a better long term hold.

[Dividend Growth Investor]

I simply cannot get comfortable enough in buying low yield stocks not matter what their dividend growth rate is. Thus I think WMT is a better pick that WAG or TGT