Target Ramps Up Dividend By 3%

Target Corporation (TGT) announced on Thursday that it is shoring up its dividend by 3%, at a time when many corporates around the world are slashing dividend payouts to preserve cash buffers during the coronavirus pandemic.

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The company’s board of directors declared a quarterly dividend of 68 cents per common share, which represents a 3% increase from the prior quarterly dividend of 66 cents. The dividend is payable on Sept. 10 this year to shareholders of record at the close of business on August 19.

Target, which has nearly 1,900 stores across the U.S., has a long history of paying regular dividend increases. The third-quarter dividend marks the company’s 212th consecutive dividend paid since October 1967 when it became publicly held. The increase announced today is on track to be the 49^th consecutive year in which Target has raised its annual dividend.

Target shares have gained some 32% since dropping to a low in March. The stock fell 1.7% to $118 in Thursday’s pre-market trading.

The retailer last month reported better-than expected quarterly results driven by a surge in online sales during the coronavirus pandemic, which helped offset higher operational costs.

This prompted Nomura analyst Michael Baker to raise the stock’s price target to $135 from $121, while maintaining a Buy rating.

Baker believes that Target is in the “bucket of retailers that will not only survive this pandemic but emerge as ongoing retail winners in a post-COVID world”.

Overall, Wall Street analysts are cautiously optimistic on the stock. The Moderate Buy analyst consensus is divided between 12 Buy and 5 Hold ratings. The $128.19 average price target implies 7% upside potential in the shares in the coming 12 months. (See Target stock analysis on TipRanks).