I'm Setting My Sights on This Retail Dividend King

Companies making the cut to be included in the S&P 500 Dividend Aristocrats -- those having grown their dividend consecutively for at least 25 years -- are few and far between. While 25 years may not seem like all that much time to some, if we think back over the last 25 years, we have witnessed a lot: The dot-com bubble followed by its burst, the Great Recession, the recent U.S.-China trade war and more recently the Covid-19 pandemic. Interspersed has been the shift to digital commerce and streaming, several ups and downs in terms of regulation out of Washington and the upward trajectory of cost pressures, including minimum wages across the U.S. When we lay out that backdrop, we see a company's ability to steadily increase its dividend speaks to a company's ability to transform its business model and adapt to the times, while continuing to drive cash flow in the face of those obstacles. This also speaks to the quality of the company and management team. While it may be stating the obvious, far from every company can accomplish this. Here's the thing, the Covid-19 pandemic has led to a number of fresh challenges that few, if any companies had to cope with previously. In recent months, we've seen a record level of activity in terms of dividend cuts and suspensions. Some of those included the Aristocrats and we can cite recent Aristocrat addition Ross Stores , as one example, that has suspended its dividend as a result of the pandemic. Taking the other side of the coin, it means those Aristocrats that are able to navigate the pandemic and still meet the expectation for boosting their dividends during 2020 are a rare breed indeed. It goes without saying then that a Dividend King is in even rarer. That brings us to Dividend King Target , which in my view has done an enviable job adapting to the changing role of the big box retailer, as it took on competitor Walmart , added grocery to collapse the time between shopper visits which took it head-to-head with Kroger and other grocery chains, and adapted its business to embrace digital shopping to fend off Amazon . How's Target doing? I recently restocked several personal and home care products and the time to ship was better than I could have had with Amazon. I suspect other shoppers are seeing the same, and much like me are enjoying the added stock keeping units and brands offered under the Target umbrella in recent years. Despite the pandemic, Target crushed its April quarter expectations delivering comp store sales growth of 0.9% with digital comp sales growing 141% year-over-year. Clearly I'm not alone in shifting my spending dollars to target. For dividend-seeking investors, Target recently boosted its quarterly dividend by 3% to $0.68 per share from the prior $0.66. While some dividend seekers may scoff at the size of the increase, I'd quickly point out this latest increase marks the retailer's 53 consecutive annual dividend increase. If there has been any one business that has seen a number of structural changes in the last 25 years, it's retail and in my view this latest dividend increase underscores Target's ability to successfully traverse the changing landscape. On an annualized basis Target's new divided equates to a yield of 2.3%, easily beating the one associated with the S&P 500, and at 41% of expected calendar 2021 earnings per share of $6.65, it would seem Target's dividend run is likely to continue. (Amazon is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)

I'm Setting My Sights on This Retail Dividend King

TGT has boosted its dividend by 3%, the company's latest increase over 53 consecutive years of boosts.

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