Chris Lange
Quick Read
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Target rallied 81% and Kimberly-Clark fell 19%, yet both raised dividends. KMB now yields 5.4% after 54 straight years of increases.
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Medtronic’s free cash flow surged 121% last quarter to $1.3 billion, comfortably covering dividends and extending its 49-year raise streak.
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Over the past year, Target (NYSE:TGT) shares rose 81.23% and Kimberly-Clark (NASDAQ:KMB) fell 19.16%. Consolidated Edison (NYSE:ED) and Medtronic (NYSE:MDT) finished somewhere between those two. All four still raised their dividends. For an income investor, that is the main point: the payout followed cash flow and board commitment, whatever the stock price did. Below, we look at how well each dividend is covered, what could help it keep growing and what could get in the way.
Target Raised Its Dividend Into a Huge Rally
Target yields 2.91% with the stock trading at $155.99, after a one-year gain of 81.23%. The retailer raised its quarterly dividend by 1.8% to $1.16 per share. The next payment is due December 1 to holders of record on November 11.
Dividend safety: Earnings cover the payout with room to spare. Trailing diluted EPS is $9.64, compared with an annual dividend of $4.56 per share. Second-quarter operating income rose 94.4% to $2.56 billion, and the quarter closed with $5.41 billion in cash and $17.84 billion in shareholders’ equity. Target bought back no stock in the quarter, though $8.3 billion remains authorized. That means dividends got first claim on the cash. The track record holds up too: in every year of the available record since 2002, the quarterly rate was higher than the year before, climbing from $0.06 to today’s $1.16.
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