Meet the Dividend King Stock That Yields More Than Triple the S&P 500. Here’s Why It’s a Buy Before the End of July.
Here’s a fact for you — the average dividend yield on the S&P 500 is currently at 1.09%, the lowest it has been in at least 155 years, dating back to 1871.
This means that of the more than 400 companies which pay dividends, the average yield among them is just over 1%. Average yields among S&P 500 companies have been between 1% and 2% throughout the 2020s; the last time it was over 2% was in 2018.
Why have yields dropped to historic lows? There are a few reasons for that. One, the stock market has been on one of its best runs in decades as the S&P 500 has had three straight years of strong returns.
When stock prices are higher, yields are typically lower. That’s because the yield is based on the annual dividend per share divided by the share price. So if the share price is up, and the dividend stays the same, the yield will be lower.
Image source: Getty Images.
Also, the S&P 500 has become top-heavy, dominated by the Magnificent Seven and other large tech stocks. The large tech stocks that do pay dividends don’t typically pay high yields. That’s largely because they are growth companies that typically invest excess capital into AI and other growth initiatives.
But there is one S&P 500 stock — a Dividend King, no less — that pays a yield that is more than three times higher than the S&P 500 average: Target (TGT +1.82%). (A Dividend King is a company that’s raised its dividend for 50 or more consecutive years.) Here’s why it’s a good time to buy Target stock by early August.
Target turnaround
Target stock has been in a turnaround mode, as shares are up 40% year to date. The retail stock has been long overdue for a turnaround as it endured four straight years — from 2022 through 2025 — of negative calendar-year returns.
Target’s stock was so beaten down that its P/E ratio had dropped to 10 late last year. So, it became more attractive from a valuation standpoint. New management has been able to right the ship. In the first quarter, Target increased sales by 7% year over year and had a 4.4% boost in comparable-store sales.
Today’s Change
(1.82%) $2.49
Current Price
$139.27
Key Data Points
Market Cap
Day’s Range
$137.55 – $140.88
52wk Range
$83.44 – $144.40
Volume
54.1K
Avg Vol
5M
Gross Margin
25.65%
Dividend Yield
3.33%
Management also raised its guidance, calling for 4% sales growth in 2026, up from the previous guidance of 2% growth. In addition, Target adjusted its operating income margin rate so that it is 20 basis points higher than the 4.6% rate in 2025. Further, it expects earnings per share (EPS) to be at the high end of its $7.50 to $8.50 range. In 2025, full-year EPS was $8.13 per share.
Dividend royalty
But the major benefit Target has for investors is its dividend, which has always been one of the best. It has raised its dividend for 55 consecutive years and pays out a high yield of 3.45%. And it just raised its dividend again, bumping it up 1.8% to $1.16 per share.
Target is a good buy right now because shareholders of record as of Aug. 12 will get the dividend raise when it gets paid out on Sept. 1. And with its still-cheap valuation and sales momentum, the stock could charge higher heading into its Q2 earnings report on Aug. 19.
