U.S. general merchandiser Target (TGT) increased their dividend by $0.02 or 14% from $0.14 to $0.16 per share last week. Target's dividend growth history is impressive. Since 1998 Target's dividend has grown at a compounded annual growth rate of 13.5%. Having a quick glance at Target's EPS (earnings per share) history since 1998, I would rate Target as an excellent candidate for a dividend growth investor's portfolio. Target's EPS growth history has been strong and consistent, as it has not decreased in any year over year period for the past 10 years. One share of Target purchased in 1998 would have cost $21, and therefore an investor who bought shares at that time would be garnering a yield of over 3% on their original investment.
Although Target currently yields only 1.2%, they could likely be compared with Walgreen (WAG), as far as past dividend growth and earnings growth goes. TGT and WAG are both low yielding stocks with strong past dividend and earnings growth. They are also both retailers that operate exclusively in the United States. As an investment idea I like Walgreen much better as I believe convenience-based drug retailing has a strong future due mainly to demographics, as well as other trends such as high energy prices, and changing consumer preferences and time constraints.
Target may not be a bad name to consider adding to my watchlist due to their consistent earnings and dividend growth as well as their strong brand, marketing and position in the U.S. marketplace.