Key Points
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Target’s next quarterly dividend won’t be paid out until December, but the stock goes ex-dividend the morning of Nov. 10.
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With more than 50 years of hikes, it’s a fair bet that the distributions will get higher year after year.
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How many shares does it take to be on the receiving end of $2,000 in annual dividend income? The math should get kinder over time.
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Time is running out to get your hands on Target‘s (NYSE: TGT) next distribution. The quarterly dividend of $1.16 per share isn’t payable until Dec. 1, but you have to be a shareholder by the close of Nov. 9 to be on the receiving end of the discount retailer’s latest payout.
Obviously, you should never buy a stock just for a dividend. It’s a zero-sum game, as the stock should theoretically adjust $1.16 lower at the open on Nov. 10 when it goes ex-dividend. Never rush your due diligence. With that out of the way, let’s get into how many shares you would actually need to lock in $2,000 in passive income.
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Target practice
Despite the “cheap chic” chain’s stellar gains — Target stock is up about 62% this year — the department store retailer yields a healthy 2.8%. With its triple-digit price tag, it probably takes fewer shares than you think to collect $2,000 in distributions through the next four quarters.
At an annualized dividend of $4.64 per share, it would take 431 Target shares to receive roughly $2,000 in distributions in the year ahead. Now for some even better news: Target shareholders will probably need fewer shares in the future.
Target is a Dividend King, a regal distinction reserved for the dozens of stocks that have boosted their distributions for at least 50 consecutive years. Target’s streak of hikes is 55 years long, surviving at least eight recessions.
With the retailer recently boosting its earnings guidance, it should stretch that run to 56 years. As the dividend increases, the number of shares required to reach $2,000 in annual Target dividends should decrease gradually over time. The clock may be ticking, but time is ultimately on your side.
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Rick Munarriz 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.
