Target Just Reported Earnings. Here's Whether the Dividend King Is Still a Buy.

After a long dry spell, retailer Target (NYSE: TGT) is back on track.

That's the quick takeaway from last quarter's earnings report anyway. The company's same-store sales grew 3.8% year-over-year on a 3.6% improvement in foot traffic for the three months ending in early August, driving total top-line growth of 5.3%, and marking the second strong quarter in a row following yet-another disappointing year ending in early February.

It's arguably not mere temporary luck either. The strategic turnaround plan unveiled in March has much of what previous plans were missing. That's effective investments in the right opportunities for improvement like more store personnel and smarter merchandise assortment (assisted by artificial intelligence).

Guidance suggests more of the same is in the cards too. Here's what this could mean for investors.

Image source: Getty Images.

It's also worth noting that evidence of a successful turnaround effort is materializing shortly after current CEO Michael Fiddelke took the helm in August of last year. Having been with the company for 20 years, he was certainly familiar with its challenges, and its potential. It simply needed the right tweaks.

Worth adding to a portfolio?

But is this retailer's stock -- a Dividend King -- worth buying following its 85% run-up from October's low (shortly after Fiddelke took over)?

Yes, it arguably is, and not just because its turnaround story has evolved from promising to full-blown likely. From that perspective, TGT's potential near-term upside is relatively modest. Most analysts only consider it a hold at this time, with a consensus twelve-month price target of just over $160. The stock's trading right below that level right now.

Longer-term though, this stock's still got a huge amount of room to recover from the steep sell-off it suffered during the wind-down of the pandemic.

You'd also be rewarded for your patience in the meantime too; newcomers would be plugging into a forward-looking dividend yield of 2.9%. And as was noted, Target's a Dividend King, boasting 55 consecutive years of annual dividend growth. That streak's not apt to end anytime soon, especially now that the company's growing in earnest again.

James Brumley 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.