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Target: A Dividend King With Increasing Online Sales And New Stores To Drive Future Growth

Mar. 08, 2021 2:11 AM ETTarget Corporation (TGT)4 Comments
William Stamm profile picture
William Stamm


  • Target’s total return overperformed the Dow average for my 62-month test period by 71.23%, which is great, and the present entry point is good.
  • Target’s dividend yield is average at 1.5% and has been increased for 52 years in a row; a solid dividend income company.
  • Target’s cash flow is good and will allow increased dividends each year, adding new stores and share buybacks.

Target (NYSE:TGT) is a buy for the total return and the conservative dividend growth investor. Target is being reviewed for an open position of The Good Business Portfolio, being my IRA portfolio of good business companies that are balanced among all styles of investing.

As I have said before in previous articles.

I use a set of guidelines that I codified over the last few years to review the companies in The Good Business Portfolio (my portfolio) and other companies that I am reviewing. For a complete set of guidelines, please see my article “The Good Business Portfolio: Update to Guidelines, March 2020”. These guidelines provide me with a balanced portfolio of income, defensive, total return, and growing companies that hopefully keep me ahead of the Dow average.

The Good, Buy Now

Target is a general merchandise retailer selling products through its stores and digital online website. Its digital site includes a range of general merchandise, including a range of items found in its stores, along with an assortment, such as additional sizes and colors sold only online. TGT is a conservative investment for the income investor who also wants good growth potential as the online business is expanded.

Target has good cash flow at $7.5 billion, and the company uses some of the cash to expand its product lines and to increase dividends each year. The great year of growth came at the right time for TGT since it was already starting to improve its online capability and merchandising development. A quote from the 4th quarter earnings call by the CEO Brian Cornell sums up the good expectations for the company's method of constant improvement.

Even before the dramatic challenges of last year took hold, our team had been busy building the retail platform of tomorrow, but 2020 accelerated everything and, as

This article was written by

William Stamm profile picture
BSEE The Cooper Union, school of engineering 1966. Engineering manager Harris corp. 23 years Software development, Grumman Corp 10 years as project manager.26 years managing my own IRA accounts, in retirement now with a CAGR of 10.98%

Analyst’s Disclosure: I am/we are long BA, JNJ, HD, DHR, MO, PM, MCD, PEP, DLR, AMT, ADP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Of course, this is not a recommendation to buy or sell, and you should always do your own research and talk to your financial advisor before any purchase or sale. This is how I manage my IRA retirement account, and the opinions of the companies are my own.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (4)

Dividend Power profile picture
TGT was great but when it was yielding over 4% in early 2019. Maybe not so much now.
08 Mar. 2021
Why not buy now on the dip?
William Stamm profile picture
@craftbrewinfo Thank you for your comment. I know others who also like the Target stores. I am a long term investor and look for good business and am willing to pay a premium for good quality. TGT has a high premium for the calls, so you might consider a buy using covered calls to get a better price. This is just my opinion.
craftbrewinfo profile picture
Just clicked to follow as I have enjoyed this current ( as well as your past) articles. Thank you! Ironically just went to Target yesterday and I really like shopping there with my wife ( which says alot because I don't like shopping, but it's a togetherness thing to do, so I shall digress!) We call Target the $100 store. Why? because we go there to get a few cans of cat food and end up with a cart full of other things we did not plan on getting. My point here is that they stores are clean, they have an excellent stock and variety items, from your apparel, household staples and even food. Checks off all categories. Prefer the shopping experience at Target to shopping at Walmart any day. I am certain there are many others who share that opinion as well. As for the stock, I just think it's too pricey at this level. Did not pass my first quick swag right out of the box- the 5 year average yield. Trading currently at a premium of nearly 1.5% to average 5 year yield. I also don't like retail stocks, BUT- this is the anti-retail stock for the personal experience reasons I mentioned above. AND they have done a tremendous job pivoting to on-line sales. That is a key. So without a margin of safety, I can't rate this as a buy at this time ( personally) , but I will add to my watch list to watch for any significant dips. I too have been migrating to superior quality companies since last year especially. TGT certainly checks that box! Thank you for a good read!
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