Title: Boost Your Portfolio with These Two Dividend Stocks
Analyzing a stock's potential involves considering various factors, including total return (price appreciation and dividends). This can provide insights into a company's prospects and long-term earnings growth potential. It's particularly important when a stock appears to be lagging the overall market.
Currently, the S&P 500 has soared over 27% this year (through Dec. 6), but not all its components have followed suit. Two of these, Target (-0.74%) and Lowe's (0.13%), have underperformed the market. However, their long-term prospects still appear promising, making this an opportunity for investors to buy shares of these Dividend Kings.
1. Target
Target made progress in 2024 by correcting an inventory imbalance caused by excessive stocking of discretionary items. Despite a 0.3% increase in same-store sales, weak quarterly results led to a 7% decline in the stock price since the start of the year.
Despite these short-term hiccups, shareholders will continue to collect dividends. Since its first dividend in 1967, Target has maintained a regular quarterly payout and increased them annually for 53 straight years. The payout ratio is currently 47%, meaning the company has ample resources to sustain and potentially grow its dividend.
2. Lowe's
Lowe's sales decreased by 1.1% in its fiscal third-quarter, largely due to cautious consumer spending on major home projects. This came as rival Home Depot also reported a similar decline. However, Lowe's share price has still seen a 23% increase so far this year, indicating an opportunity for long-term investors to outperform.
Lower interest rates should further support homeowners' construction projects, which will likely benefit Lowe's. The company has a history of paying dividends, including a 4.5% increase earlier this year, and has ample cash flow to support its payouts.
Enrichment Data Insights:
- Target: While the base article does not provide specific long-term growth forecasts for Target, the company is focusing on retail strategy and digital transformation to drive growth.
- Lowe's: Lowe's has detailed long-term growth forecasts and specific initiatives outlined in its 2025 Total Home Strategy. The company is expected to see significant growth over the next several years.
- Both Companies: Both Target and Lowe's have a history of paying dividends and increasing them over time.
- Target's underperformance this year in comparison to the S&P 500 may present an opportunity for investors looking to dive into finance, as the company's dividend yield and history of annual dividend increases indicate potential long-term returns on investing in Target's stocks.
- Lowe's, despite experiencing a decline in sales and underperforming the market, is still a promising investment for finance enthusiasts. The company's dividend payouts, interest rate-supported growth, and strategy for home projects make it an attractive option for investors looking to grow their money through finance.
