Can Target Afford Its Dividend? 🎯

Will Target's dividend walk out the door along with all of its stolen merchandise? ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 

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Don't miss your chance to grab this incredibly powerful package. Click here for your FREE Ultimate Dividend Package. - Rebecca Barshop, Senior Managing Editor SAFETY NET Can Target Afford Its Dividend After Putrid Earnings? Marc Lichtenfeld, Chief Income Strategist, The Oxford Club Last week, the share price of retail giant Target (NYSE: TGT) dropped 13% in one day after the company reported disappointing third quarter results. Among the most startling figures was the $600 million the company expects to lose in gross profit due to theft. Target pays a $1.08 per share quarterly dividend, which comes out to a 2.65% annual yield. So will the dividend walk out the door along with the stolen merchandise? Free cash flow in fiscal 2023 (ending January 31, 2023) is expected to be more than cut in half, dropping to $2.27 billion from $5.08 billion. It is forecast to recover in fiscal 2024 (ending January 2024), though still not to the level that it was at in fiscal 2021. If fiscal 2023's free cash flow comes in at $2.27 billion - where it is expected to be - and dividends paid also matches projections at $1.73 billion, then the payout ratio will be above 76%, which is not in my comfort zone. I like to see payout ratios of 75% or lower. That way, there is still room for the company to pay the dividend even if free cash flow declines further. Safety Net penalizes companies that have falling free cash flow and a payout ratio above 75% - so those things are concerning. SPONSORED Will Biden Destroy the Dollars in Your Wallet? First it was Nixon... and now it could be Biden. On August 15, 1971, Nixon shocked the world by slashing the ties between gold and the dollar. It set us up for surefire failure... the consequences of which we are paying for today. Now it's Biden's turn. This time I suspect he'll go even further. Click here to see why I'm convinced he'll start confiscating cash on December 14. On the other hand, Target has an incredible track record when it comes to paying and raising its dividend. The company has lifted the dividend every year for 54 years. It was the "Summer of Love" when Target started raising its dividend. Richard Nixon was president. "Build Me Up Buttercup" by The Foundations was the No. 1 song in the U.S., and the top movie was Funny Girl with Barbra Streisand. That was a long time ago, and it's impressive that Target has consistently raised its dividend every year since 1969. Given that amazing history, I don't expect the dividend to be cut anytime soon, despite the mediocre dividend safety rating. I think management will run through fire to preserve it. That being said, the financials are deteriorating, so it's worth keeping an eye on. The dividend isn't likely to be reduced in the near future, but if free cash flow doesn't recover next year, we'll have to revisit it. Have a wonderful Thanksgiving. I'm thankful that you're a Wealthy Retirement reader. Enjoy the holiday. Dividend Safety Rating: C If you have a stock whose dividend safety you'd like me to analyze, leave the ticker in the comments section. Good investing, Marc Leave a Comment RECOMMENDED LINKS Click here to capitalize on one of the most legendary investment strategies in history. These 3 Cryptos Could All Be Bigger Than Bitcoin MORE FROM WEALTHY RETIREMENT How to Protect Yourself Against Inflation Today The Time to Get In on These Markets Is Now Time to Bet Against Buffett? A Stock With a 100% Yield? Facebook Twitter Email Share Push Alert SPONSORED REVEALED: The Next Step in Our Digital Evolution... Amazon... Microsoft... Apple... and Netflix... all skyrocketed in value with the evolution of the internet. Now mankind is witnessing an exciting new technology emerge... One that BlackRock compares to the dawn of the internet and the smartphone... And that J.P. 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