Editor’s Note: Related tickers: Target Corporation (NYSE:TGT), Lowe’s Companies, Inc. (NYSE:LOW), The Home Depot, Inc. (NYSE:HD), Caterpillar Inc. (NYSE:CAT), International Game Technology (NYSE:IGT), DuPont Fabros Technology, Inc. (NYSE:DFT)
According to S&P Dow Jones Indices data, the number of dividend increases was up 16.3% in May and 29.1% in the first five months of this year compared to the same periods a year earlier. Among the notable dividend growers are several companies that are boosting their payouts by double-digit rates.
Recently, the list of dividend growers with double-digit dividend increases included a few dividend growers with long streaks of dividend raises, including S&P Dividend Aristocrats Target Corporation (NYSE:TGT) and Lowe’s Companies, Inc. (NYSE:LOW). Here is a closer look at these two and three other recent double-digit dividend hikes, and here’s a glance at one market-beating strategy worth watching.
Target Corporation (NYSE:TGT), the second-largest discount retailer in the United States, recently declared a 7-cent increase to its dividend, boosting the quarterly payout to 43 cents per share. With the latest dividend hike, the stock is yielding 2.5% on a payout ratio of 39% of the analysts’ current-year consensus EPS estimate. At the end of May, the company reported comparable-store sales down 0.6% year-over-year in its fiscal first quarter, while its EPS was down 5.0%. These disappointing results reflected weak sales of apparel and other seasonal and weather-sensitive products.
The company has also lowered its adjusted EPS guidance for full-year 2013 from prior guidance of $4.85 to $5.05 to $4.70 to $4.90. The company’s historical growth record in the United States has been a result of robust consumer spending over years, a success that Target Corporation (NYSE:TGT) is expecting to accomplish with its international expansion into Canada, where it has opened its first 24 stores in the first quarter.
With plans to open 200 new stores in Canada over the next decade, Target Corporation (NYSE:TGT) will continue to pursue its objective of reaching $100 billion in sales and $8.00 in EPS by 2017. (For the reference, the company achieved $73 billion in sales in 2012.) Initial reports suggest that Canadian store sales have been robust, with particularly strong sales of home and apparel products.
Lowe’s Companies, Inc. (NYSE:LOW) was another S&P Dividend Aristocrat with a double-digit increase in its dividend. The company hiked its quarterly payout by 2 cents to 18 cents per share, a 12.5% increase compared to the previous quarterly dividend rate. The company has suffered weak same-store sales in the first quarter, mainly due to cold weather that hurt sales of seasonal items. However, its relative sales weakness is not a new development, as Lowe’s Companies, Inc. (NYSE:LOW) Companies has had 16 consecutive quarters of weaker same-store sales than its archrival The Home Depot, Inc. (NYSE:HD).
Still, given the strength in the housing market, sales to contractors have been particularly strong. The company has also increased its online offering in a sales push. As the same-store sales in the second quarter recover from the colder-than-usual weather in the quarter before—a 10% sales gain in April suggests a rebound—the company reiterates its goal of achieving same-store sales growth of 3.5% this year, with a 4% year-over-year gain in total revenues in 2013. Analysts are generally bullish about the company’s long-term EPS growth, forecasting a 17.3% EPS CAGR for the next five years. Interestingly, Lowe’s Companies, Inc. (NYSE:LOW) Companies has supported its EPS growth through strong share buybacks, and this trend will continue, as the company has authorized $5 billion in share repurchases through 2015. The company is currently yielding 1.7% on a payout ratio of 35% of the analysts’ current-year consensus EPS estimate.