Dividends4Life: Should You Add Wal-Mart Or Target To Your Portfolio For Dividend Growth?

Target (TGT) and Wal-Mart (WMT) are two of the nation's largest big box retailers. Both companies have had weak financial results in their latest quarters. Wal-Mart and Target are both Dividend Aristocrats with a long history of growing dividends and earnings. Which company is a better buy now for long-term dividend growth investors?

Wal-Mart has a significantly lower payout ratio, higher growth rate and lower volatility than Target. Target has a higher dividend yield, but the company's P/E ratio is about 20, versus about 16 for Wal-Mart. Wal-Mart is growing international sales profitably, while Target has floundered in Canada. Target's Canadian expansion will likely turn around and add to the company's bottom line. Wal-Mart's ability to expand internationally has been proven over the last several years. Wal-Mart has a long growth runway ahead of it internationally, while Target's ability to expand beyond North America is unknown.

Source: Seeking Alpha

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