This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Behind my contrarian bet on Target

Stocks in this article: MMLP RSX TGT TUR

By Charles Sizemore

May was a good month for Sizemore Capital's portfolios. I made modest portfolio adjustments in my Dividend Growth and Tactical ETF strategies, but otherwise I am content to let our basic strategies for 2014 play themselves out.

I expect to see dividend-focused equities continue their outperformance relative to the broader market, and I expect to see European and emerging-market equities outpace their U.S. rivals.

In May I made portfolio moves in the Dividend Growth portfolio. I took profits in Martin Midstream (MMLP) and initiated a new position in Target Corp (TGT).

Target may seem like a curious portfolio addition. Its CEO recently resigned in disgrace due to fallout from last year's credit card security breach. And Target's expansion into Canada 14 months ago has proven to be an unmitigated disaster, generating roughly a billion dollars in losses so far.

In my view, these setbacks are temporary bumps in the road and provide us with an excellent buying opportunity in one of the most shareholder-friendly companies in the world. Target has raised its dividend every year since 1967—a run of 47 years, and counting—and it has also been a serial share repurchaser. Since 2002, Target has reduced its shares outstanding from 1.3 billion to just 638 million as of its last reporting. That's a reduction of 44%.

Let's return to Target's dividend growth. Target's dividend has grown by 19% over the past year, which would be good news by itself. But what is truly impressive is the consistency. Target has grown its dividend by a compound annual rate of 20% for the past 10 years. And going back 20 years, it's 13%. (Of course, some of the recent statistics look impressive due to the overall reduction of Target's stock price.)

Target pays a respectable 2.9% current yield, and its payout is growing at a good pace—making Target a holding for the dividend growth portfolio.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs