Target Lifts Dividend as Post-Pandemic Tailwinds Drive Growth

Target will raise its annual dividend by nearly a third, putting it on the same plane as rival Walmart as it continues to benefit from post-pandemic tailwinds.

Target  (TGT) - Get Report said Wednesday that it will raise its annual dividend by nearly a third, putting it on the same plane as rival Walmart  (WMT) - Get Report as the big-box retailer continues to benefit from post-pandemic tailwinds that it said will fan strong sales and earnings.

Target said it was raising its dividend to 90 cents a share from 68 cents, payable Sept. 10, to shareholders of record on Aug. 18, reflecting “… our ongoing commitment to disciplined capital deployment,” Target Chief Financial Officer Michael Fiddelke said in a statement.

Based on Tuesday's closing price of $235.10, the new annual dividend rate would lift the implied dividend yield to 1.53% from 1.16%, which compares with rival Walmart of 1.57%.

“Given strong operating performance and cash generation, our business is well-positioned to support this robust increase in the dividend, even as we ramp up capital investments in our business and continue to invest in our team.” Fiddelke said.

The move comes as Target, Walmart and other retailers continue to benefit from the economic reopening that has added to already strong gains made during the pandemic, which sparked a surge in online ordering and curbside pickup as well as demand for home furnishings and other home accessories. 

UBS analyst Michael Lasser on Tuesday upgraded Target shares to buy from neutral, saying in a note to clients that Target’s profitability should remain strong even as the pandemic ends and discounting returns.

Shares of Target were down 0.08% at $235.90. The stock has risen more than 30% year to date. Walmart shares were down 0.35% at $139.34.

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