‘retail sector is a little harder to invest in’

Shares of Target Corp (NYSE: TGT) are up nearly 1.0% on Thursday after the retail behemoth announced a significant increase in its quarterly dividend.

Target now has implied dividend yield of 2.78%

Target increased its dividend to $1.08 this morning that translates to a 20% increase from the previous 90 cents a share payment. The big box department store chain now has implied dividend yield of 2.78% versus a much lower 1.83% at Walmart.

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Founded in 1967, the Minneapolis-headquartered retailer has raised dividend every year since its inception. In 2021, Target had raised its dividend by 32%.

The news comes only days after Target said it will sell unwanted items at deep discounts to get rid of excess inventory. Consequently, it had warned, its profit margin will be hit in the current quarter.

DCLA’s Sarat Sethi reacts to the Target news

Despite the dividend hike, DCLA’s Sarat Sethi remains uninterested in Target Corporation, or the retail space at large. Explaining why this morning on CNBC’s “Squawk Box”, he said:

Those yields are good, but they’re not really that attractive. There are a lot of other areas that if you’re a dividend investor, you can look at and say, hey, I want to be a part of it. So, I think the retail sector is a little harder to invest in.

Names he likes for dividend investors include Morgan Stanley, American Express, and Bristol-Myers Squibb. Broadly speaking, he sees opportunities in the “reopening” plays right now.