April 19, 2017

Can Target Keep Growing Its 4.5 Percent Dividend Yield?


The numbers that signal Target’s ability to keep dividends on a growth path




Target (NYSE:TGT)’s share price has been on a steady, sharp downward spiral since the middle of 2015, and the company has lost nearly one-third of its valuation over the last 12 months. With a P/E ratio of just over ten, Target is trading at an extremely attractive price point, especially for a dividend investor because the yield is nearly 4.5%. But how sustainable is Target’s dividend capability, moving forward?

One of the main reasons Target’s share price collapsed was that comparable store sales remained extremely weak last year. Considering the state of the competition in the retail market, coupled with the steady rise of Amazon’s sales in the United States, Target found it extremely difficult to make more customers walk into its stores. Comparable sales decreased 0.5% in 2016, with traffic decreasing by 0.8%.

With Walmart and Amazon going to head to head, things are indeed very difficult for smaller players. Target, being a bigger player with 1,802 stores, still has a chance, but it will entirely depend how they can differentiate their offering from a crowded and fiercely competitive market.




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