Target dividend: pay, coverage and yield
Target’s dividend starts at $4.68 per share. Cash coverage has varied: payouts exceeded free cash flow in some years, while Target prioritizes profitable growth, then dividends, then buybacks.
How much does Target pay per share?
The dividend starts at $4.68 per share. The base case applies 3% annual increases, reaching $4.82 and $4.97. The bear case freezes the dividend, while the bull case applies 8% increases, reaching $5.05 and $5.45. The five-year record shows uninterrupted increases, but investment needs and volatile cash flow limit confidence in faster growth.
| Jan 2026 | Feb 2025 | Feb 2024 | Jan 2023 | Jan 2022 | |
|---|---|---|---|---|---|
| EPS, diluted | 8.13 | 8.86 | 8.94 | 5.98 | 14.10 |
| Free cash flow per share | 6.22 | 9.69 | 8.24 | -3.25 | 10.31 |
| − Dividends paid, per share | 4.51 | 4.43 | 4.35 | 3.95 | 3.14 |
What this means. Real free cash flow is lower than free cash flow because it subtracts the value of shares given to employees as pay, which reduces existing owners’ share of the business.
Is Target’s dividend covered by its cash?
Revenue declined across the latest three fiscal years, while operating margin recovered from its fiscal 2022 low. Target’s real free cash flow margin moved from negative in fiscal 2022 to positive in the latest two years, but inventory and supplier-payment timing can make a single year misleading. Diluted EPS recovered from the fiscal 2022 trough; real free cash flow per share shows cash after investment and stock-based pay, while buybacks can lift per-share results and payouts exceeded free cash flow in some years.
The record also shows why free cash flow is not an absolute legal limit on dividends or buybacks. A company can use cash already held or borrow when current free cash flow is negative, but that reduces its cushion or increases debt. Target says it invests first in profitable growth, pays a competitive dividend second, and uses excess cash for buybacks last. In the first six months of 2026, it made no share repurchases while continuing to pay dividends. A buyback authorization is permission, not a promise.
| Jan 2026 | Feb 2025 | Feb 2024 | Jan 2023 | Jan 2022 | |
|---|---|---|---|---|---|
| Free cash flow | 2,835 | 4,476 | 3,815 | -1,510 | 5,081 |
| − Dividends paid | 2,053 | 2,046 | 2,011 | 1,836 | 1,548 |
| − Share buybacks | 408 | 1,007 | 0 | 2,646 | 7,188 |
| = Free cash flow not paid out | 374 | 1,423 | 1,804 | ||
| = Paid out more than the free cash flow | 5,992 | 3,655 | |||
| Paid out, % of free cash flow | 86.8% | 68.2% | 52.7% | not meaningful | 171.9% |
What this means. In some years the company paid shareholders more cash than the business generated, so it had to use savings or borrow money to cover the difference.
What could change Target’s dividend?
Management guides to 5.0% net sales growth and a 6.0% operating margin for fiscal 2026. It forecasts diluted EPS of $9.90–$10.90, including $1.65 per share from Q2 tariff refunds. It plans $5,000 million of capital spending and $1,000 million of incremental operating investment. It also plans 30 new stores and 130 full remodels.
| October 2027 | October 2028 | October 2029 | |
|---|---|---|---|
| Earnings | 4,107 (3,240 / 4,480) | 4,302 (2,968 / 4,892) | 4,504 (3,180 / 5,330) |
| Shares (millions) | 455 (456 / 451) | 455 (458 / 448) | 456 (460 / 444) |
| Dividends per share | 4.68 (4.68 / 4.68) | 4.82 (4.68 / 5.05) | 4.97 (4.68 / 5.45) |
| Price to earnings | 16.00 (12.00 / 18.00) | 16.00 (11.00 / 20.00) | 16.00 (10.00 / 22.00) |
What is Target’s dividend yield today?
The model starts from a market price of $154.24 and a next-twelve-month earnings estimate of $9.63848, implying 16.0 times earnings. The forecast keeps 16 times in the base case, because improving traffic supports confidence while the temporary refund and heavy investment limit expansion.