A Controversial but Still-Reliable Dividend Stock – TipRanks Financial Blog

Target (NYSE:TGT) is controversial in 2023, but does this mean investors should abandon the company? It’s still a solid dividend payer, and besides, Target delivered pretty good (albeit not spectacular) quarterly financial results. Overall, I am bullish on TGT stock as it can be a reliable buy-and-hold stock, though you’ll have to decide whether the recent headlines surrounding Target are too bothersome for you.

Headquartered in Minneapolis, Target operates a famous big-box retail store chain. I won’t delve too far into the details of the controversy, but let’s just say that Target is involved in a culture war — similar to what Anheuser-Busch Inbev (NYSE:BUD) is struggling with right now — because it was selling LGBTQ merchandise, and some people didn’t like that.

I’ve been around long enough to see issues like this come and go plenty of times. Soon enough, I expect offended shoppers to return to Target because it’s convenient and because Target’s product prices are fairly low. As we’ll discover, there’s actually a more alarming issue that’s causing problems for Target, but the company is addressing this problem while continuing to reward loyal shareholders with quarterly dividend payouts.

Target Acknowledges Theft is a Serious Problem

The alarming issue I’m referring to is theft, which has a serious impact on any retailer’s bottom line and indirectly makes products more expensive for law-abiding customers. This is such a major problem that Target CEO Brian Cornell addressed it in the company’s first-quarter 2023 earnings press release, and Joshua Enomoto wrote an entire article about this important topic.

Whereas Enomoto suggests that there’s “no immediately viable solution appears on the horizon for TGT stock,” Cornell acknowledges the problem of “theft and organized retail crime” (which, I presume, includes shoplifting) but sounds prepared to take decisive action. Thus, Target’s CEO assured that his company is “making significant investments in strategies to prevent this from happening” in its stores.

I would be interested to see a breakdown of those “significant investments,” so hopefully, there will be updates from Target on this matter. In any case, Target’s theft problem hasn’t prevented the company from maintaining its quarterly dividend payouts of $1.08 per share. With that, Target offers a 3% annual dividend yield, which is significantly higher than the sector…