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Target Approves $5 Billion Repurchase Plan, Increases Dividend

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Dividend announcement

On September 21, 2016, Minneapolis-based Target (TGT) announced a dividend of $0.60 per share, raising its quarterly dividend payments by 7% YoY (year-over-year).

The dividend will be paid on December 10, 2016, during the company’s fiscal 4Q17 (ending January 31, 2017). Its current dividend announcement is in line with its dividends paid over the last two quarters.

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Share buyback announcement

Target also announced a new $5 billion share buyback program to replace its previous $10 billion authorization plan, which will be exhausted by the end of the current fiscal year. 

The company noted that until July 30, 2016, it had repurchased 125 million shares worth $8.8 billion since the previous authorization plan had been announced in January 2012.

Share price movement post-announcement

The market had a positive reaction to Target’s dividend and buyback announcements. The company’s stock price rose 1.2% to close at $69.47 on September 21, 2016.

Target is currently sitting at a YTD (year-to-date) fall of 5.4%, ~20% below its 52-week high. Most of its supermarket and mass merchandising competitors have had equally bad or worse performances in 2016. While Costco (COST) has recorded a YTD fall of 4.3%, Kroger (KR) and SUPERVALU (SVU) have fallen 25% and 31%, respectively. Walmart (WMT), however, has delivered an exceptional performance. The company’s stock has risen 17.5% as of September 21, 2016.

About Target

Founded in 1902, Target is the 11th-largest retailer in the world in terms of sales. The company operates 1,797 stores in the United States as of August 31, 2016. It sells a large variety of merchandise including apparel, electronics, toys, food, and groceries.

The company saw total revenue of $71.6 billion in the last 12 months. Walmart saw trailing-12-month sales of $483.8 billion.

Investors looking for exposure to Target through ETFs can invest in the iShares S&P 500 Value ETF (IVE), which invests 1.3% of its total holdings in the company.

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