This Day On The Street
Continue to site
ADVERTISEMENT
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

Behind my contrarian bet on Target

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

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
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!
SYM TRADE IT LAST %CHG

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs