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Target Raises Dividend by One Third as Retail Rebound Continues

Target Corporation (TGT) is a leading retailer of everyday essentials and fashionable, differentiated merchandise at discounted prices.

The company generated 27% of its revenue from Beauty and Household Essentials, 20% from Food and Beverage, 18% from Home Furnishings and Decor, 18% from Apparel and Accessories, 17% from Hardlines, and a marginal amount from other sources during the first quarter ended May 1, 2021.

Retail Spending Continues to Accelerate

In-store sales transactions across the United States rose 8% from their pre-pandemic levels in February 2020, according to Criteo, with stores implementing in-store sales campaigns experiencing an average of a 38% year-over-year rise.

Target appears to be a beneficiary of these trends with first quarter revenue that rose 23.3% to $24.2 billion, beating consensus estimates by $2.43 billion, with non-GAAP earnings of $3.69 per share, beating consensus estimates by $1.47 per share. Comparable sales came in at 22.9% versus a 10.7% consensus, as comparable digital sales soared 50%.

These gains prompted at least one analyst to upgrade their outlook on the stock. UBS analyst Michael Lasser believes that the company’s strong positioning will become even more evident over the coming quarters as it blows past concerns over the comparable periods ahead.

The company raised its quarterly dividend by 32.4% to $0.90 per share, representing a 1.48% forward yield. The dividend is payable on September 10, 2021 to shareholders on record as of August 18, 2021.

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