Dividends4Life: Put Some Dividends in Your Cart With Target

Put Some Dividends in Your Cart With Target

Posted by D4L | Monday, September 08, 2014 | | 0 comments »

Anyone currently holding Target (TGT) stock can be forgiven for being grumpy over the past year or so. Shares of this blue-chip are down more than 15% in the past year, the company was the focal point of one of the biggest consumer hacks in history, and things got so bad that CEO Gregg Steinhafel was directed toward the exits.

Even if Target’s two biggest problems aren’t completely behind it, they’re going to be in the rearview mirror soon. Couple that with a pretty fair valuation of about 16 times next year’s earnings, and TGT stock is likely to stay level or improve from here — barring some unseen catastrophe, of course. Then consider the potential for dividend growth. Target currently pays out 56% of its earnings in dividends, which isn’t spectacularly low, but does leave room for continued payouts. Once profits do pick up again, Target’s quarterly checks should get fatter. Even at half the dividend growth rate of the past five years, you’d be looking at a quarterly payout of 70 cents per share five years from now — good for a yield on cost of 4.6% if you were to buy in at current prices.

Source: InvestorPlace

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