These 2 Major Retailers Just Declared Dividend Raises. Should You Buy Them Now?

As consumers, we regularly hand over money to retailers in this country. Yet there are selected companies in the sector that turn this relationship around by paying folks to own them.

I'm talking, of course, about shareholder dividends. Last month, two famous and long-standing operators in the sector, Macy's (NYSE: M) and TJ Maxx and Marshalls owner TJX Companies (NYSE: TJX), announced dividend raises. Both hikes were substantial, so they're worth diving into a bit to determine whether they support the buy case for the two retail stocks. Here's what I think.

Image source: Getty Images.

1. Macy's

In advance of its latest earnings release, Macy's declared its dividend raise. The company said its investor payout would be getting a 5% enhancement, for a new quarterly total of just over $0.19 per share.

Macy's is a leaner operation these days because it's been pursuing its "bold new chapter" strategy. The plan is to reduce the company's footprint by selling off chunks of its considerable (and often quite valuable) real estate holdings. The program seems to be closer to the end than the beginning, as fewer transactions were recorded in the company's fiscal 2025. With that, the gains from such sales tumbled to $3 million from fiscal 2024's $41 million.

A shrinking footprint means fewer stores to collect revenue. Not surprisingly, the company's net sales slumped in fiscal 2025 compared with 2024, though not by a scary amount (2.4% to $21.8 billion). In a more encouraging development, comparable sales, a key metric in the retail trade, ticked up 1.5%. That represented a return to annual growth for the company.

The company was also well in the black on the bottom line for the year, although net income not under generally accepted accounting principles (GAAP) fell by 14% to $643 million ($2.32 per share).

On a negative note, guidance wasn't impressive, with the company forecasting a dip in fiscal 2026 revenue to $21.4 billion to under $21.7 billion, and "comps" ranging from a decline of 0.5% to a gain of 0.5% on the previous year's figure. Per share, adjusted net income should land at $1.90 to $2.10 per share.

That, to me, is telling. It seems that even a leaner and more focused Macy's will still have an uphill climb as a traditional retailer in a world swarming with aggressive online competitors. While I admire the improvements the company has made, I'd pass on the stock.

Macy's raised dividend was dispensed on April 1 to investors of record as of March 13. It yields a relatively generous 4.2% at the most recent closing price, which places it in high-yield dividend territory.

2. TJX Companies

A retail stock that looks more appealing is discount specialist TJX. One well-liked item the company hasn't been marking down is its quarterly distribution -- at the end of March, the company announced no less than a 13% dividend raise, pushing up the per-share payout to $0.48. The company didn't hesitate to add that this is its 29th dividend raise in the last 30 years.

TJX's announcement came more than a month after the company's fourth-quarter and full-year earnings release, which covered its fiscal 2026. Comparable sales saw a pleasant 5% lift that year, helping net sales grow by 7% over fiscal 2025 to nearly $60.4 billion. GAAP net income experienced a more pronounced lift, rising by 13% to almost $5.5 billion ($4.87 per share).

Challenges such as tariffs and inflation were foremost in the American consumer's mind last year, which helped drive business to bargain outlets like those operated by TJX. Though this economy isn't out of the woods yet, management seems to be preparing for a more modest fiscal 2027. It guided for comparable sales growth of only 2% to 3% and per-share net income of $4.93 to $5.02 -- which would be 3% higher year over year at most.

Investors sold out of TJX in the wake of that earnings report, and the guidance was a key reason for this. Although I wouldn't be quite so discouraged, as the company continues to expect some level of growth and our economy could still take some real hits, I don't see a spectacular future for TJX. There are stocks with greater potential elsewhere.

There's still a chance for market players to take advantage of TJX's dividend raise. It kicks in with the next payment, scheduled for June 4, for stockholders of record as of May 14. The $0.48 per share would yield a theoretical 1.2%.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends TJX Companies. The Motley Fool has a disclosure policy.