"Dividend Kings are stocks that've had their dividend payouts raised for 50 consecutive years or more, such as Target (NYSE:TGT ). That is an exceptional feat that the vast majority of stocks in the market cannot match. For a business to pay rising dividends to its shareholders for half a century, it must truly be on a strong footing. However, these Dividend King stocks sometimes trade at a discount."
"There are also times when interest rates are high and dividend stocks become unflattering. Why? Higher interest rates cause Treasury yields to rise, so investors feel more comfortable pursuing a 4% risk-free yield instead of investing in a Dividend King that yields the same. We may be at a turning point, though. The Federal Reserve is becoming more aggressive with interest rate cuts, and Treasury yields are declining."
Dividend Kings are stocks that have increased dividend payouts for 50 consecutive years or more, demonstrating long-term financial strength. Interest rate cycles influence dividend-stock appeal because higher rates raise Treasury yields, making risk-free returns relatively more attractive. The Federal Reserve's move toward rate cuts and falling Treasury yields can rekindle demand for dividend stocks, especially undervalued Dividend Kings. Target experienced explosive pandemic-era gains but corrected heavily since late 2021, falling nearly 65% from its peak. Fiscal 2020 revenue was $78.1 billion with $3.28 billion in net income. Fiscal 2025 revenue was $106.56 billion with $4.09 billion in net income. TGT trades near $90 while a conservative fair value approaches $140, implying less than 11 times earnings.
Read at 24/7 Wall St.
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