That being said, Target also increased its quarterly dividend by nearly 20%. Target says it is the 184th consecutive dividend paid since it went public in 1967. The company’s next quarterly payout of $0.43 per share will have grown by 22% compounded annually over the past five years.
Clearly, Target management sees its recent struggles as a short-term issue, and I’d tend to agree. Target has a solid track record of posting strong earnings results, and the company’s expansion both in the United States as well as Canada means sales should continue to grow at more normal rates going forward.
The bottom line
Discount retailers have thrived in the post-financial crisis environment, reaping the rewards of an American consumer base that is, for the most part, still clinging to their purse strings with an iron-clad grip.
This isn’t entirely a surprising development, in light of the many pressures still facing the U.S. consumer, including the payroll tax increase, slow-growing economy, and still weak labor market.
As a result, these stocks should continue to grow profits at satisfactory rates for the foreseeable future. Each of them produces strong results and rewards their shareholders with billions in share buybacks and dividend payments. Consequently, I think all three of these stocks are investment-worthy.
Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale Corporation (NASDAQ:COST). The Motley Fool owns shares of Costco Wholesale. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Are Discount Retailers Good Stocks to Buy? originally appeared on Fool.com and is written by Robert Ciura.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.