“the retail sector is a little more difficult to invest in”


Shares of Target Corp (NYSE:TGT) rose nearly 1.0% on Thursday after the retail giant announced a significant increase in its quarterly dividend.

The target now has an implied dividend yield of 2.78%

Target increased its dividend to $1.08 this morning, which translates to a 20% increase from the previous payout of 90 cents per share. The big box department store chain now has an implied dividend yield of 2.78% compared to a much lower 1.83% at Walmart.

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Founded in 1967, the Minneapolis-headquartered retailer has increased its dividend every year since its inception. In 2021, Target had increased its dividend by 32%.

The news comes just days after Target announced it would be selling unwanted items at deep discounts to get rid of excess inventory. Therefore, he warned, his profit margin will be hit in the current quarter.

DCLA’s Sarat Sethi reacts to Target news

Despite the dividend hike, DCLA’s Sarat Sethi remains indifferent to Target Corporation, or the retail space in general. Explaining why this morning on CNBC’s “Squawk Box,” he said:

These returns are good, but they are not really attractive. There are a lot of other areas that if you’re a dividend investor, you can look into and say, hey, I want to be in. So I think the retail sector is a bit harder to invest in.

Names he likes for dividend investors include Morgan Stanley, American Express and Bristol-Myers Squibb. Generally speaking, he sees opportunities in “reopening” plays right now.

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