Walmart Has Gone Practically Nowhere, While Target Is Up 68%. But Only 1 of These Dividend Kings Is a Buy in September.

After a few years of watching Walmart (NASDAQ: WMT) crush Target (NYSE: TGT), the pauper has become the prince in 2026. Shares of Target are bullseye-red hot, soaring 68% this year. In the other corner, Walmart is a laggard with a 4% year-to-date decline.

The two retail chains have withstood the test of time. They have raised their quarterly dividends for more than five decades. However, which one is the better buy in September? A case can be made for buying both, but the name I'm going with might surprise you.

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Right on Target

When you see a stock outperforming against a rival over the past eight months, you might conclude that Target is growing faster than Walmart. You might also assume that it's trading at a higher earnings multiple or packs a lower yield, given the wide performance gap. You would be wrong on all three counts.

Target's trailing revenue has risen a mere 2% over the past 12 months. Walmart's trailing top-line growth at 6.2% is more than three times faster. Target stock is simply bouncing back from a dark space. It will end a run of three consecutive years of declining revenue this fiscal year.

Turning to valuation, Target has a much lower P/E ratio despite the stock's heady ascent. You can buy the "cheap chic" retailer for a reasonable 17 times trailing earnings, less than half of Walmart's multiple of 39.

Both stocks are Dividend Kings, with at least 50 years of annual payout increases. However, Target's current yield of 2.8% is three times Walmart's 0.9%. You're buying into these stocks hoping you're more in capital appreciation than in income, but knowing that there's a good chance the quarterly distributions will keep rising is a plus for both stocks.

Climbing the wall of Walmart

In defense of the country's leading brick-and-mortar retailer, Walmart isn't the laggard if you zoom out a bit more. Walmart's stock has more than doubled over the last five years. Target shares have fallen by a third in that time. Yes, the earnings multiple is higher, and the dividend is lower, but that is because Walmart has historically commanded a healthy premium to the market.

Walmart's all-weather appeal is its perfect cost controls and high-speed inventory turns, which enable it to sell at lower price points than its competitors. Target is coming off three straight fiscal years of slightly declining sales, but Walmart has only had one year of declining sales in the last 47 years.

Picking a winner

You can't go wrong with either stock right now. Walmart is a recession-resilient juggernaut, and buying when it's having a down year is often rewarded for long-term investors.

I'm still going to have to go with Target.

A lot of good things have been happening since longtime Target executive Michael Fiddelke was promoted to CEO in February. Comps turned positive. After years of losing this retail game of tug-of-war, Target is gaining market share for the first time in years. It's sadly coming at Walmart's expense.

Momentum is on Target's side. Fiddelke recently doubled his sales target to 4% for this year. The earnings outlook remains strong, even with the new CEO earmarking $2 billion for renovations and operational improvements. Momentum wins with this strong turnaround story.

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target and Walmart. The Motley Fool has a disclosure policy.