The combination of Target Corporation (TGT, Financial) raising its dividend by 20% and its stock hitting a new 52-week low pushed the discount retailer’s dividend yield over 2.50% today — an extremely rare occurrence.
Shares closed Wednesday’s session trading at $46.86, where they now feature a 2.56% yield. It’s the first time the stock has ended a trading day with a yield that high since March 2009, when the market was bottoming out. And even then, shares paid 2.50% only briefly before snapping much higher — pushing their yield much lower — with the broader market.
Below I’ve put together a visual aid to illustrate just how uncommon this is:
The graph tracks Target’s share price (black) over the last four years. The red line is the threshold the stock must dip below in order for shares to be purchased with a 2.50% dividend yield. Obviously the red line only moves when Target announces a change to its dividend rate, which it has done four times in the last four years: improving its payout by 14% in 2008, 6% in 2009, 47% last year, and finally 20% today.
As you can see, the black line hasn’t exactly been attracted to the red line over the last four years — they’re currently crossing for only the second time. Will Target’s stock bounce like it did in 2009, the last time the two lines touched? Or will the opportunity to lock in a 2.50% yield linger this time around?
Shares closed Wednesday’s session trading at $46.86, where they now feature a 2.56% yield. It’s the first time the stock has ended a trading day with a yield that high since March 2009, when the market was bottoming out. And even then, shares paid 2.50% only briefly before snapping much higher — pushing their yield much lower — with the broader market.
Below I’ve put together a visual aid to illustrate just how uncommon this is:
The graph tracks Target’s share price (black) over the last four years. The red line is the threshold the stock must dip below in order for shares to be purchased with a 2.50% dividend yield. Obviously the red line only moves when Target announces a change to its dividend rate, which it has done four times in the last four years: improving its payout by 14% in 2008, 6% in 2009, 47% last year, and finally 20% today.
As you can see, the black line hasn’t exactly been attracted to the red line over the last four years — they’re currently crossing for only the second time. Will Target’s stock bounce like it did in 2009, the last time the two lines touched? Or will the opportunity to lock in a 2.50% yield linger this time around?
