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Target (NYSE: TGT) has had its share of problems over the past year, but its dividend is definitely not one of them.

The nation’s second largest big box retailer just increased its dividend for the 54th consecutive year, putting it in exclusive company. With more than 50 straight years or dividend increases, Target is one of just a few dozen Dividend Kings.

On Wednesday, September 17, Target declared a quarterly dividend of $1.14 per share, up 2% from $1.12 per share the previous quarter.

This marks the 233rd straight quarter that Target has paid out a dividend since 1967 when the company went public. It is also the 54th straight year that the dividend has increased.

“I want to quickly reiterate our priorities, which have been consistent for decades,” Jim Lee, Target CFO, said on the second quarter earnings call last month. “First, we fully invest in our business and projects that meet our strategic and financial criteria. Second, we support the dividend and look to build on our decades-long record of growing the per share dividend annually. And finally, once the first two goals have been satisfied, we look to deploy any remaining excess cash to repurchase shares over time within the limits of our middle A credit ratings.”

One of the best yields on the market

Not only does Target have a long history of reliably boosting its dividend; it also pays out one of the highest yields on the market.

Currently, Target’s dividend has a 5.09% yield. Considering the average dividend yield on the S&P 500 is about 1.2%, it is unusually high. And the average yield in its sector is about 3.16%, according to Seeking Alpha. Further, only about 4% non-REIT stocks in the S&P 500 have yields over 5% — and only one other retailer, Best Buy (NYSE:BBY) is among that group.

The yield is the percentage of the stock price that goes to dividends, so the higher the yield, the more that is paid out.

Companies may have higher payouts than Target, like BlackRock, for example. BlackRock pays out $5.21 per share in dividends, but it has a much higher stock price of $1,120 per share. So if you invested $5,000 in BlackRock, you’d get about $23 per quarter in dividend income at a yield of 1.86%.

If you invested the same $5,000 in Target stock, which trades at around $90 per share, you’d get about three times more, roughly $63 in dividend income per quarter at a yield of 5.09%.  

Target stock has struggled mightily, down about 33% YTD and 41% over the past 12 months. It has not been a good investment from a capital appreciation standpoint, but it has delivered consistent income.

Also, the stock is very cheap, trading at 10 times earnings. Wall Street analysts see Target stock rebounding, with a median price target of $100 per share. This suggests about 11% upside.

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