The stock market has offered investors a rollercoaster ride over the past several weeks, shifting between gains and losses. Expectations of rising volatility have been high, as we can see through recent peaks in the VIX — and when this volatility index rises, it also suggests investors are growing more fearful.
Concerns emerged late last year regarding the high valuations of artificial intelligence (AI) stocks and other growth players. And this year, worries about the economy and the war in Iran added to the uncertainty. All of this has weighed on investors’ minds and appetite for stocks. The S&P 500 finished the first quarter with a decline of 4.6%.
But even in this volatile market, you can continue to make wise investments. Let’s check out the smartest dividend stock to buy with $120.
Image source: Getty Images.
A good time to buy dividend stocks
First, a quick note about why now is a great time to get in on dividend stocks. These players are fantastic because they can help protect your portfolio during periods of uncertainty. In many cases, they operate in industries that generate steady revenue growth — and the dividends themselves offer you a guaranteed stream of passive income regardless of what the overall market is doing.
The following dividend player has struggled in recent years, but it reached an important turning point over the past year — and investors already have started to reward its efforts as it’s climbed about 20% so far this year. The stock I’m talking about is Target (TGT +0.00%).
Today’s Change
(0.00%) $0.00
Current Price
$120.45
Key Data Points
Market Cap
$55B
Day’s Range
$119.15 – $121.51
52wk Range
$83.44 – $126.00
Volume
5.3M
Avg Vol
6.4M
Gross Margin
25.44%
Dividend Yield
3.77%
Target saw revenue soar during early pandemic days, thanks to its assortment of essentials, e-commerce strengths, and solid delivery and pickup options. But in recent years, it lost momentum. Target took steps last year to gain efficiency, and this year, new chief executive officer Michael Fiddelke set out a full strategic growth plan — efforts include revamping floor plans and displays, boosting employee training, and strengthening the assortment of goods.
A reasonable valuation
As this plan begins to deliver results, the stock could continue to head higher, especially considering that today it trades at reasonable levels – just under 15x forward earnings estimates.
On top of this, Target is a Dividend King, meaning it’s lifted its dividend for more than 50 consecutive years. This shows that rewarding shareholders is a priority, so there’s reason to be optimistic that the company will continue along this path. Target pays a dividend of $4.56 at a yield of 3.8%, surpassing the 1.2% yield of the S&P 500.
Right now, considering this dividend strength and the potential of the Target recovery story, this retail stock is a wise one to buy in a volatile market and hold onto for the long haul.
