), the operator of general merchandise and food discount stores,
revealed its plan to utilize its free cash to boost stakeholders'
return by announcing a dividend hike.
The Minneapolis, Minn-based company, Target, raised its annual
dividend by 19.4% to $1.72 (or 43 cents quarterly) from $1.44 per
share (or 36 cents quarterly). The company announced that the
increased dividend will be paid on Sep 10 to stockholders of
record on Aug 21. This marks the 184
dividend payment for the company ever since it went public in Oct
However, the news did not provide any impetus to the stock, as
Target's share price fell 0.8% or 57 cents to close at $69.43 on
Wednesday. The dividend yield based on the new payout and the
last closing market price is 2.5%.
Target, an S&P 500 company, last hiked its annual dividend
to $1.44 from $1.20 per share in Jun 2012, reflecting an increase
Dividend hikes not only enhance shareholder's return but raise
the market value of the stock. Through this strategy, the
companies bolster investor confidence in the stock, thereby
persuading them to either buy or hold the scrip instead of
selling them. Looking ahead, the company remains confident of its
growth potential, suggesting enhanced value for shareholders.
Although Target's dividend hike is a regular feature and came
exactly after a year, it may be considered to be part of a
strategy to provide cushion to the stock. This follows the Zacks
Rank #4 (Sell) company's disappointing first-quarter fiscal 2013
results that prompted management to take a conservative stance on
its future earnings.
The quarterly earnings, including the U.S. and Canadian
operations, came in at 81 cents a share that dipped from $1.03
reported in the prior-year quarter.
Target's adjusted earnings of $1.05 per share also dropped
from $1.11 delivered in the year-ago quarter. This relates to
results from the U.S. operations only. However, it managed to
exceed the Zacks Consensus Estimate of 85 cents.
Following soft first-quarter results, Target now projects
fiscal 2013 earnings between $4.70 and $4.90 per share down from
a range of $4.85 to $5.05 forecasted earlier.
Other companies, which recently increased quarterly dividend,
Cracker Barrel Old Country Store, Inc.
) by 50% to 75 cents,
Helmerich & Payne, Inc.
) by 233% to 50 cents, and
Tiffany & Company
) by 6% to 34 cents.
CRACKER BARREL (CBRL): Free Stock Analysis
HELMERICH&PAYNE (HP): Free Stock Analysis
TARGET CORP (TGT): Free Stock Analysis Report
TIFFANY & CO (TIF): Free Stock Analysis
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