Target announces 20% dividend hike, stock wavers
Yahoo Finance Live anchors discuss Target stock wavering after the company announced a 20% dividend hike.
Video Transcript
BRIAN SOZZI: We're watching shares of Target right now just being up. Sometimes, they're a little down. But, today, they are up a little bit pre-market after announcing a dividend rise of 20%. For those of you keeping score at home, that means its quarterly payout will now be $1.08 per share, up from $0.90.
And, well, whipped cream on you know what here because this has been a very challenging week here for Target after their warning midweek. They cut their operating margin outlook warning about inflation. And, really, for the past two days, you've seen Wall Street come here and completely hit the reset button on Target's profit estimates for this quarter, next quarter, the holiday quarter, and next year.
JULIE HYMAN: It makes sense, right? This was a planned dividend increase, by the way. It's a little bit-- it's at the higher end of what the company had talked about. So it's not like they're coming out of nowhere and saying, like, please, buy our stock. Here's the dividend. It was something that was in the works.
- Same week, though, as you mentioned, of the planned several actions for the second quarter that they're going to be taking, which, really, for the consumers, that might mean you're being able to pay a little bit lower in some of those categories. But I think more notably here in the investment community, if some of the thesis has been revolving around you're looking for high quality companies that have strong balance sheets and are producing dividends, it's moreso appealing to that dividend-seeking audience that's out there as well.
BRIAN SOZZI: Yeah, and just staying on Target, I really liked the piece in the "Wall Street Journal" today by my friend Sarah Nassauer, retail reporter there over at the Journal, really looking at some of the big things that CEO Brian Cornell has done since he took over in 2014. I remember covering one of the first things he did was get rid of the Canadian business. Came in, turned it down, was losing billions of dollars. Was a horrible decision.
In 2017, he came out, said he was investing billions of dollars build this future vision of Target. Both of those moves paid off correctly. And now this is his third move as Sarah perfectly brings up-- brings to light in her piece. His third thing is getting out of all this inventory, really, before anybody else in retail. Maybe that will serve Target well this holiday season. And maybe their results will not be as bad as now is priced into the stock.
- Well, there's two turnovers in inventory that comes before the holiday season, right? You've got the back to school season. And then you start to get into a lot of the heavy [? untake-- ?] or intake, rather, of that inventory leading up to the holiday season. And then, of course, comes the buying online and return in store, buy online, pick up in store. All the BOPIS, BORIS. We'll break that down in a couple of months.
