1 Overlooked Dividend King With a 55-Year Winning Streak Worth Buying Now

After a couple of soft years for sales, Target (NYSE: TGT) is finally turning the corner. The stock is up about 61% year-to-date, and investors who follow its dividend track record shouldn't be surprised.

Target has raised its dividend for 55 straight years, exceeding the minimum 50-year threshold to qualify as a Dividend King. That kind of consistency points to a durable business that has weathered multiple recessions while continuing to return cash to shareholders.

On Sept. 23, 2026, Target's board declared a $1.16 quarterly dividend, payable on Dec. 1 to shareholders of record as of Nov. 11. With a relatively low payout ratio, a solid yield, and improving sales trends, the stock still looks worth buying even after its big run.

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Updated stores are driving improved traffic flow

Net sales reached $26 billion in the quarter ended Aug. 1, up 5% year over year. Comparable sales (from stores open at least 13 months) rose 3.8%, driven largely by a 3.6% increase in traffic.

That's a meaningful improvement over the comparable-sales declines Target posted in fiscal 2023 and fiscal 2025, and a clear reversal over the year-ago quarter, when comps fell 1.9%.

Target is also managing costs more effectively. Even excluding tariff refunds, earnings per share climbed 20% year over year. The gains follow store updates that included major changes to the center-store grocery assortment and a reset in Fun101 categories such as toys, collectibles, sports, and electronics.

There's also room for comps to improve further. Management continues to flag weaker performance in home goods and apparel, two areas that have lagged and could recover as demand stabilizes.

A 2.9% yield well covered by earnings power

Target is sticking with the playbook it's followed for decades: invest in the business first, then support the dividend. Dividend investors should appreciate that the company expects to spend about $5 billion on capital projects to drive growth, while keeping its payout ratio below 50%, leaving plenty of room to sustain the dividend in good times and bad.

Target paid just more than $1 billion in dividends during the first half of fiscal 2026, and management is targeting a 40% payout ratio over the long run. Over the past 12 months, the payout ratio was about 47% of earnings.

Based on the $1.16 quarterly dividend, the forward yield is about 2.95%. Importantly, that payout is backed by a business that's regaining momentum. Management expects full-year sales to rise about 5%, and analysts see long-term earnings growth averaging 5.7% annually. Put together, Target looks like a reliable dividend stock that can keep rewarding investors for years to come.

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