T he retail segment of the market is showing strength, representing seven of the top 40 industry groups in Monday's IBD. Major retailersTarget ( TGT ) andKohl's ( KSS ) pay healthy dividends and are basing ahead of earnings reports expected later in the month.
Both merchants have a history of stable earnings performance and rising dividend payouts. As a bonus, each has also outperformed the S&P 500 year-to-date.
Kohl's is part of the department stores group, ranked No. 27 as of Monday. It operates more than 1,100 stores in 49 states. Kohl's has a 2.5% dividend yield, highest in its group among stocks priced above 10 a share.
Kohl's will report first-quarter earnings results before the market open on May 14. Analysts expect an 8% drop in earnings per share on a 3% increase in revenues.
Shares are in the fifth week of a new base about 8% off its 52-week high. The stock advanced more than 20% from a cup-with-handle breakout in February.
Analysts see full-year fiscal 2016 earnings up 8%, to be followed by a 10% increase in fiscal 2017.
Kohl's earns an impressive 91 Relative Strength Rating, which means that it's outperforming 91% of stocks in terms of 12-month price performance.
Target bills itself as an upscale discounter and operates more than 1,700 stores in the U.S. With a market cap of approximately $51 billion, Target is more than three times the size of Kohl's. Target's second-quarter dividend is payable on June 10 to holders of record as of May 20. The current payout is 52 cents per quarter, which translates to an annual yield of 2.6%.
Analysts see double-digit gains in earnings to $1.02 per share in Q1 on roughly flat revenue.
Target is in the fourth week of a new potential base. Shares are currently battling for support at a rising 10-week moving average line.