The decision was made on an opportunity that I felt was staring blank, right into the eye.  The opportunity I felt in my gut, came from an analysis I did on a stock over this past weekend.  I simply used our dividend screening tool to assess the situation and thought – this fits in and based on past history and valuations currently, I had to pull the trigger.

Target (TGT) – was purchased on Monday the 16th of June (3 days ago).  After I did my research I felt it was right – it was time to squeeze and purchase the company’s stock.

The analysis, which largely stemmed from my previous post/analysis, on target:

• Dividend yield: 3.63% at the time, which is higher than the S&P on average, one of our pegs and from our post earlier, is over 150 basis points (1.50%) higher than the 5 year historical average!  Also, the trend with the stock price and yield shows that at every increase, you typically will receive the appreciation of the stock down to a more moderate level over the next 12 months,  until the next dividend.  Love this!
• Payout Ratio: it is below 60%, which we dividend diplomats here love to see.  I know Bert and I stay true to this form when it comes to a dividend aristocrat, so I was confident with this.
• Price to Earnings: My analysis at my previous post, showed an approx 17-18 P/E ratio, which is less than the S&P average of roughly 19.32.  I was happy with this and felt there was value to be had.
• Dividend Increases: 42 years in a row.  Enough said…  with a growth rate over the last 3 years of 20%?  Sounds good to me.  Also to note – last week the company announced an increase of 20.9% from $0.43 to $0.52, cha ching!  How do you like that Bert (the other diplomat)?

Highlights with the Company:

• Down approximately 9.7% YTD at the date of purchase due to the next bulletpoints
• Security Breach with Credit Cards, which I feel Target has taken their hits and is now in the past
• Step down of CEO, which I think is a good thing as the board of directors weren’t a fan and some of his plans did not perform as he projected
• Tagging along above, the Canada retail stores haven’t performed as well with what was estimated/projected by management, which has had a pressure on their earnings and price

This total purchase of $2,750 adds $99.84 to my projected annual Dividend Income, which inches me closer to my projected annual dividend income goal of $3,750.

How do you feel about Target?  Think this was a good entry point?  Think that this dividend is sustainable?  Anyone add to their current position?  I hope we can enjoy the benefit of their decline in price and continued increase in dividends, thank you for stopping by everyone!

-Lanny