Meet the Dividend King Down 28% in 2025 That Has a Lower Payout Ratio and a Higher Yield Than Coca-Cola and PepsiCo

• Target has been deed hard by user spending pressures.

• But it continues to rake successful the escaped currency travel to enactment its increasing high-yield dividend.

• Target’s dividend is truthful beardown that it rivals well-known user staples names Coca-Cola and PepsiCo.

• 10 stocks we similar amended than Target ›

Dividend stocks adhd a passive income constituent to a fiscal portfolio alternatively than relying solely connected imaginable superior gains to thrust returns. High-yield dividend stocks tin make adjacent much passive income. However, dividends are lone arsenic reliable arsenic the institution that pays them. So chasing precocious yields from companies with deteriorating concern theses is simply a atrocious idea.

A amended attack is to absorption connected prime companies astatine tenable values that tin spend their existent payouts and person a runway for supporting aboriginal dividend raises.

Coca-Cola (NYSE: KO) and PepsiCo (NASDAQ: PEP) are 2 well-known dividend stocks that are truthful accordant they've boosted their payouts for 63 and 53 consecutive years, respectively.

Target (NYSE: TGT) sports a mouth-watering 4.5% dividend output and has raised its payout for 53 consecutive years. Coke, Pepsi, and Target each suffice arsenic Dividend Kings -- companies that person paid and raised their dividends for astatine slightest 50 years.

However, Target has struggled successful caller years with low-single-digit income declines and falling operating margins. Despite Target's anemic results, it is simply a safer dividend banal than Coke and Pepsi by a cardinal metric.

Here's wherefore income investors whitethorn privation to instrumentality a person look astatine Target successful 2026.

Some Dividend Kings routinely rise their payouts by mid-to high-single digits, whereas others marque precise tiny dividend increases conscionable to support their regal status. Target has done conscionable that with little than 2% dividend raises for 3 consecutive years. However, immoderate discourse is successful order.

Target's results person been poor, and it doesn't privation to marque the dividend disbursal excessively precocious to the constituent wherever it gobbles up each of its excess earnings. Plus, Target raised its dividend by a staggering 20% successful 2022. Therefore, the caller debased increases are smoothing retired that outlier instance.

Target has a dirt-cheap valuation, trading astatine conscionable 14 times guardant net compared to 16.3 for Pepsi and 21.1 for Coca-Cola. But supra each else, what makes Target specified a compelling turnaround banal for income investors is that its dividend sports a precocious output and is affordable. Despite declining sales, Target is inactive generating a important magnitude of net and escaped currency travel (FCF).