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I love dividend increases. Some are more meaningful than others. Yesterday's upward alteration of Target's (TGT) quarterly payment was pretty notable, although it's not necessarily doing much for the stock. According to the corporate press release, the new dividend is 47% higher than the previous one. Investors in the retailer will now receive 25 cents per share every three months, translating into an annual payout of $1 per share. Interestingly enough, the stock concluded Thursday's session on a flat note, as our Closing Bell piece indicates. And today, the stock is higher by a little over 1% to $52.97 with roughly three hours to go before the final trade.
Shouldn't there be a little more excitement? Maybe. I mean, a 47% jump in a dividend check is nothing to be casual about. Then again, it doesn't suddenly give Target the greatest yield ever, which, at the current price, is about 1.9%.
Shareholders should take this as a very positive message concerning future cash flows. In a bearish period such as this one, that's important. It may not mean the situation is a trade for the quick players, but for those who are looking to enter the market in a judicious manner, with the intent of properly positioning a portfolio for the eventual comeback of the major indexes, the retailer might make for a solid bet.
The 52-week high on the stock is $58.52. The one-year chart is fairly decent. At roughly $53 per share, Target appears fairly resilient. Management is taking a stand with the dividend increase: it's telling Wall Street that everything is fine, no matter what external conditions say. Longer-term players should investigate the chain's fundamentals and put the equity on a watch list.
Disclosure: I don't own any company mentioned; positions can change without notice.
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