Forget Tech Stocks: This Dividend King’s Yield Could Hit 9% Within 20 Years
While tech stocks grab headlines, dividend aristocrats quietly build wealth through compounding returns.
The Power of Patience
This established player demonstrates how consistent dividend growth transforms modest yields into substantial income streams over time—projecting potential 9% yields on current investments within two decades.
Compounding in Action
Annual dividend increases, reinvestment strategies, and time work together to create explosive yield-on-cost growth that outpaces most speculative investments.
Steady Wins the Race
While cryptocurrency markets swing wildly, this dividend king maintains payment increases through multiple economic cycles—proving reliability often beats flashy returns.
Long-term wealth building doesn't need daily price alerts—just consistent companies that treat shareholders like partners rather than exit liquidity.
Target is underachieving its potential
Target has reported negative comparable store sales in six of the last nine quarters. That doesn't look good, but the worst seems to be behind the company. It reported a 1.9% year-over-year decline in COMP sales last quarter, indicating a positive trend from the 5.4% decline in the same quarter two years ago.
In fact, Target reported three consecutive quarters of comp sales growth earlier this year before tariff-related pressures, including purchase order cancelations, impacted its sales performance.
Retail is a highly competitive industry, but Target has differentiated itself with its merchandising strategy. For example, its Fun 101 initiative, which aims to bring more stylish and culturally relevant products in hardlines, is driving strong demand in trading cards, with sales up 70% year to date.
Target's ability to partner with celebrities and brands to offer exclusive designs and styles in beauty, apparel, and other categories makes it a favorite destination for many shoppers looking for great deals. This gives Target a profitable niche in the industry that has supported a 68% increase in its trailing-12-month dividend over the last five years.
An undervalued dividend stock
Despite macroeconomic headwinds, Target still reported adjusted earnings per share of $2.05 and recently announced a quarterly dividend of $1.14. This dividend will be paid on Dec. 1, 2025, to those who hold shares at the close of business on Nov. 12, 2025.
Even with the year-over-year dip in earnings, Target is only paying out 62% of its full-year expected earnings in dividends. Given that the business will likely generate better sales performance when the economy is stronger, it makes the forward dividend yield of 5% look very tempting.
Target's long history of growing its dividend is also a great indicator that this business is a lot stronger than investors are giving it credit for. This is a fundamentally sound retail business that knows how to navigate economic cycles, as it has demonstrated over its history.
Analysts expect the company's adjusted earnings to grow at an annualized rate of 3.2% over the next five years. The dividend should grow in line with earnings. Assuming it sustains a 3% compound annual growth rate in earnings and dividends, Target could grow its dividend of $4.48 on a trailing-12-month basis to $8.09 in 20 years. That means from the recent share price of about $89.50, investors who patiently hold the stock for the long term could eventually earn 9% on their original investment from dividends alone.
With the stock trading at a forward price-to-earnings (P/E) multiple of 12, which is below its five-year average forward P/E of 16, the stock could also be undervalued. Overall, the stock offers a favorable risk-reward proposition, with the high yield sweetening the deal for shareholders.
