TGT - Target: Dividend King Held Down By Unfavorable Conditions

2024-06-22 07:08:59 ET

Summary

• Target's price has struggled despite strong business fundamentals, because of short-term headwinds caused by macroeconomic conditions.
• The current dividend yield is 3.1% and the payout ratio remains healthy. Future dividend raises are likely to continue.
• Factors such as interest rate hikes, inflation, and rising unemployment have impacted Target's growth. However, the company is making active strides to offset these challenges.
• Based on my dividend discount model, I estimate a double-digit upside potential.

Overview

Target ( TGT ) is arguably one of the most popular retailers across the US at the moment. Their wide variety of product offerings, affordable pricing, and ability to keep up with trends has propelled Target into such a strong cultural relevance that visiting your local target with your partner is a totally viable option for a date night. If this is the case, you might ask why Target's price has struggled to gain any momentum then. Over the last three years, Target's price is down over 36% and the total return is still negative at over 33%....

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