Markets: Retailer Target Hikes Dividend
Mega retailer Target has moved to hike its shareholder dividend by a strong margin after a very good year financially. The retailer had strong sales of $93bn in 2020, wherein its yearly revenue growth percentage-wise was more than that of the preceding 11 years.
- Target has boosted its quarterly dividend by 32% to 90 cents per common share. Before that, its quarterly dividend was 68 cents per common share.
- Based on its new dividend, Target’s implied yearly dividend yield has risen to 1.55% based on its closing share price of $231.94 on Wednesday. That’s on par with some major rivals like Walmart’s 1.57%.
- Target says its stronger cash flow is sufficient to fund its dividend hike as well as support capital investments for business growth. It’s a testament to staying strong in a pandemic with the help of online sales and on-demand delivery.
- Though physical retail sales were greatly affected by the pandemic, retailers like Target and Walmart that have made strategic investments in e-commerce benefitted from a great e-commerce surge. Even now, with the gradual economic reopening, physical retail sales are bound to recover and create good outcomes for such retailers.
- Alongside paying dividends, Target also returns money to shareholders with stock buybacks. In that arena, it’s currently on a $5bn buyback plan initiated in 2019.
- Target’s shares are up more than 30% year-to-date. It has a current market value of $115bn.