Target Corporation (TGT), Wal-Mart Stores, Inc. (WMT): Will This Dividend Stock Have a Happier Holiday?

The store falls behind the performance numbers of its competitors. Target is up less than 1% over the past year and up about 9% year to date. Wal-Mart Stores, Inc. (NYSE:WMT) is up 3% for the year and 11% year to date. Sears Holdings Corp (NASDAQ:SHLD) is up 46% year to date and Amazon is up 19%.

Target does pack a nice dividend. The store’s yield is 2.7% — higher than Wal-Mart Stores, Inc. (NYSE:WMT)’s 2.5%. But Wal-Mart Stores, Inc. (NYSE:WMT) wins at payout ratio, or the percentage of net income paid out in dividends. Wal-Mart’s at 43% for the trailing 12 months while Target’s at 35%. That’s unsurprising considering that Target’s still largely in growth mode as it pursues the Canadian expansion.  The company has also increased payouts for the past four years while Wal-Mart’s numbers wavered.

Amazon.com, Inc. (NASDAQ:AMZN) doesn’t pay dividends because the money goes back into the company to fuel growth. In Amazon.com, Inc. (NASDAQ:AMZN)’s case, the reinvestment resembles refueling the engine of a sports car mid-race.

Foolish final thoughts
Target might fall short of Wal-Mart again this holiday season. But long-term investors can still look forward to the results of the Canadian expansion. And that dividend would look nice wrapped in a bow under the tree.

The article Will This Dividend Stock Have a Happier Holiday? originally appeared on Fool.com is written by Brandy Betz.

Brandy Betz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com.

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