We recently identified the Top 10 Stocks for Dividend Capture Strategy in March 2025. In this article, we will explore where Target Corporation (NYSE:TGT) stands among these top picks and why it could be a best pick for dividend capture strategy in March 2025.
We are navigating a sea of uncertainty in the current financial environment, which has emerged due to recent policy decisions by the new U.S. presidency. According to CNBC, as of March 14, 2025, in a period of three weeks, the U.S. stock market recorded historical turbulences, reporting a loss of approximately $5 trillion in value. The decline is attributed to aggressive trade policies and escalating tariffs. According to Barclays strategist Emmanuel Cau, this has heightened investor fears.
“Our interactions with clients indicate that the mood music is changing. While many see recession talk as premature, concerns about erratic policy from the new administration abound, with the ‘uncertainty tax’ hitting growth expectations.”
Proper investment strategies are required to attain stability and reliable returns amid such market volatility.
READ ALSO: 15 Best Low-Priced Dividend Stocks to Buy Now
In this context, dividend-paying stocks have risen as a haven for investors looking to mitigate risk without compromising a steady income stream. Consistent dividend-distributing companies have often exhibited financial robustness with the aim of upholding their commitment to shareholder value. In other words, dividend stocks are relied upon for stable income during turbulent market periods when investors cannot be certain of capital gains. The current market environment reflects such turbulent periods, diverting income-seeking investors toward dividend-paying stocks.
Additionally, when compared against the non-dividend paying stocks, the dividend equities tend to be less volatile. For investors, the consistency in the income offered by these stocks is a cushion, safeguarding them from market downturns. In this regard, these stocks can introduce stability to a portfolio, which would otherwise be heavily affected by market fluctuations. As a result, investors can preserve capital and still participate in the equity markets.
The dividend season is closing up. Among the strategies that enhance the investment value in dividend-paying stocks, the dividend capture strategy is often preferred, which involves purchasing dividend-paying stocks just before the ex-dividend date and selling shortly after. The strategy is especially attractive now, as concerns over tariffs and their impact on the U.S. economy continue to rise.
Also, companies with a history of growing dividends have often delivered higher returns with less volatility. Such performance raises the benefits of incorporating dividend-paying stocks into our investment strategy, especially during the current period when market value has declined to $46.78 trillion.
Our curated list of 10 stocks for dividend capture strategy in March 2025 offers a few choices that could potentially strengthen the portfolio of investors interested in dividend-paying stocks and looking to restructure their portfolios.
Our Methodology
We compiled our list based on a few criteria to maximize the benefits for the investors interested in employing the dividend capture strategy. The primary criterion was the minimum dividend yield. We did not include stocks with a dividend yield of less than 3% in our list, as this ensures that our list is comprised of only high-dividend stocks. In addition to this, we included stocks with a recovery period of no more than two days, meaning that the share price typically rebounds quickly after the ex-dividend date, thereby reducing downside risk. We ranked the stocks based on their yield to prioritize those with the highest returns for the investors. This approach ensures investors can focus on stocks that provide the best potential income. We have also taken into account the number of hedge funds backing the stocks to cover the institutional interests.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A woman purchasing groceries at a Target store, with a cart full of products.
Target Corporation (NYSE:TGT)
Dividend Yield: 4.30%
Recovery days: 1.4 Days
No. of Hedge Funds: 56
Based in Minneapolis, Minnesota, Target Corporation (NYSE:TGT) is a major retail chain offering a wide range of consumer goods, including apparel, home essentials, and groceries. The company distinguishes itself from other discount retailers by creating a balance between affordability and trend-focused merchandising and private-label brands. In addition to Amazon, Walmart also poses tough competition for Target Corporation in the market. The company has over 1,956 physical stores across the United States and operates an online store.
Target Corporation (NYSE:TGT) maintains a strong dividend yield of 4.30% and appeals to both income and growth investors. The company exceeded its initial expectations with a 1.5% increase in Q4 comp sales. Company guidance for the next 5 years also remains positive, with an expectation of $15 billion in revenue growth. Specifically, the company’s digital business remains profitable, with nearly 9% growth in Q4. The figures contribute to Target Corporation’s self-sufficiency with respect to dividend payments.
Target Corporation (NYSE:TGT) has a 1.4-day recovery timeframe reflecting positive market reception. Institutional backing remains significant with 56 hedge funds listed in Insider Monkey’s Q4 2024 database invested in the stock. Interested investors purchasing the stock before the ex-dividend date of May 14, 2025, will qualify for the next dividend payment.
Overall, TGT ranks 6th on our list of top 10 stocks for dividend capture strategy in March 2025. While we acknowledge the potential for TGT as an investment, our conviction lies in the belief that some AI stocks hold more significant promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TGT but that trades at less than 5 times its earnings check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Invest In According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
