Target Lifts Dividend Again: Is It Still a Reliable Income Pick?

Barchart·06/17/2025 09:34:18

Target Corporation TGT has once again rewarded income-focused investors, announcing a 1.8% increase in its quarterly dividend to $1.14 per share. While modest in percentage terms, the hike underscores the retailer’s unwavering commitment to shareholder returns. This marks the 54th consecutive year of annual dividend growth, a streak quite a few S&P 500 companies can match.

This also represents the 232nd straight dividend payment since October 1967, highlighting exceptional payout consistency across market cycles, changing economic dynamics and retail disruptions. This is the kind of dependability that many investors seek in an income stock. The dividend will be payable on Sept. 1, 2025 to shareholders of record as of Aug. 13. 

Target’s first-quarter fiscal 2025 dividend payout totaled $510 million, slightly up from $508 million a year ago. While the company continues to face a competitive retail landscape and shifting consumer behavior, its willingness to increase the dividend signals management’s confidence in ongoing cash generation.

Supporting this confidence is Target’s trailing 12-month after-tax return on invested capital (ROIC), which came in at a healthy 15.1% for the period through the first quarter of fiscal 2025. While slightly down from 15.4% a year ago, this still suggests disciplined capital use and consistent profitability. TGT’s dividend payout ratio is currently around 55%.

In a market where dividend cuts can suddenly make headlines, Target remains committed to enhancing shareholder value. For investors seeking reliable income from a well-established name, Target is one of them. TGT’s latest move strengthens its reputation as a trustworthy dividend payer with an eye on long-term performance.

How Target’s Dividend Strategy Compares to Costco and Lowe’s

While Target continues its 54-year streak of dividend growth, Costco Wholesale Corporation COST recently raised its quarterly dividend by a notable 12% from $1.16 to $1.30 per share. This increase highlights Costco’s strong cash flow and disciplined financial management. Costco has consistently appealed to investors seeking income backed by robust fundamentals and market resilience.

Lowe’s Companies, Inc. LOW also reaffirmed its shareholder commitment with a 4% dividend hike, bringing its quarterly payout to $1.20. With more than 25 consecutive years of dividend increases, Lowe’s demonstrates reliability and steady capital return. Lowe’s has paid dividends every quarter since 1961, underlining its long-term dedication to income investors.

Target’s Price Performance, Valuation and Estimates

Target stock has declined 8.8% over the past three months against the industry’s growth of 9.8%. 
 

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Target’s forward 12-month price-to-earnings ratio of 12.36 reflects a lower valuation compared to the industry’s average of 32.47X. TGT carries a Value Score of A.
 

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Target’s current financial-year sales and earnings per share implies a year-over-year decline of 1.9% and 15.2%, respectively. 
 

Image Source: Zacks Investment Research

Target currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Target Corporation (TGT): Free Stock Analysis Report
 
Lowe's Companies, Inc. (LOW): Free Stock Analysis Report
 
Costco Wholesale Corporation (COST): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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