On Target

Retailer Target surprised everyone when it raised its expectations for its second quarter, citing improved traffic and sales trends. The stock rose on the news, but it remains down substantially over the past year. Given that Target is a brick-and-mortar retailer in a world where consumer dollars are shifting online (and very often to competitor Amazon.com), there’s plenty of justification for pessimism despite the beaten-down valuation. But don’t count Target out just yet.

Target’s plan is to invest in exclusive brands, e-commerce and smaller store formats. The company has begun revamping many of its stores to make them more customerfriendly and has also been adding more custom merchandise. This includes fashion-forward clothing lines and household goods that have proven popular in initial tests. In May, the company launched the Cloud Island line of baby products, and it plans to launch 12 new brands by the end of 2018.

Target also pays a dividend, which recently yielded around 4.6 percent, thanks to its knocked-down stock price. Target has increased its dividend annually for 46 consecutive years, a streak the company will certainly aim to maintain as it works through the current upheaval in the retail industry.

There are no guarantees that Target will successfully adapt to the changing retail landscape. But its depressed stock price combined with a decadeslong record of dividend increases makes it warrant serious consideration.