COST vs TGT: Dividend Yield, Growth & Safety Comparison
Costco Wholesale Corp /New (COST) and Target Corp (TGT) are both in the Consumer Staples sector, making them natural rivals for dividend investors. TGT offers a significantly higher 4.01% yield compared to COST's 0.52%, a gap of 3.49%. For dividend growth, COST leads with a 5-year CAGR of 20.9% versus TGT's 9.4%. Both stocks carry a "Safe" dividend safety rating. TGT is a Dividend Aristocrat with 42 years of consecutive increases.
Key Metrics Comparison
| Metric | COST | TGT |
|---|
| Dividend Yield | 0.52% | 4.01% |
| Annual Dividend | $5.06 | $4.50 |
| 5-Year CAGR | 20.9% | 9.4% |
| Payout Ratio | 27% | 55% |
| Consecutive Years | 0 | 42 |
| Price | $1015.00 | $115.49 |
Yield Comparison
Target Corp (TGT) currently yields 4.01%, which is attractive for the broader market. That's 3.49% more than Costco Wholesale Corp /New (COST), which yields 0.52%. In dollar terms, TGT pays $4.50/share annually versus COST's $5.06/share.
Dividend Growth
Over the past five years, COST has grown its dividend at a 20.9% CAGR compared to TGT's 9.4%. COST: Dividend growth is slowing — the 3-year CAGR of -47.1% trails the 5-year rate of 20.9% and the 10-year rate of 15.8%. TGT: Dividend growth is slowing — the 3-year CAGR of 1.8% trails the 5-year rate of 9.4% and the 10-year rate of 11.1%.
Dividend Safety
COST's dividend safety is rated "Safe." The payout ratio of 27% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 3.7x. TGT's dividend safety is rated "Safe." The payout ratio of 55% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 1.8x. COST's payout ratio of 27% is more conservative than TGT's 55%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in TGT generates approximately $401/year in dividend income, compared to $52/year from COST — a difference of $349/year. At $100,000, that gap widens to $3490/year.
Verdict
- Best for income: TGT
- Best for growth: COST
- Best for safety: COST
Frequently Asked Questions
Which has a higher dividend yield, COST or TGT?
Target Corp (TGT) has a higher dividend yield of 4.01% compared to Costco Wholesale Corp /New (COST) at 0.52%.
Is COST or TGT a better dividend growth stock?
Costco Wholesale Corp /New has the stronger dividend growth with a 5-year CAGR of 20.9%, compared to Target Corp's 9.4%.
Which is safer for dividend income, COST or TGT?
Costco Wholesale Corp /New's dividend safety is rated "Safe" while Target Corp is rated "Safe." The payout ratio of 27% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 3.7x. The payout ratio of 55% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 1.8x.
How much income does $10,000 in COST vs TGT generate?
A $10,000 investment in COST generates approximately $52/year in dividends, while the same amount in TGT generates about $401/year.
Is COST or TGT a Dividend Aristocrat?
Target Corp is a Dividend Aristocrat with 42 consecutive years of increases. Costco Wholesale Corp /New does not currently qualify for aristocrat status.
Which has a lower payout ratio, COST or TGT?
Costco Wholesale Corp /New has a lower payout ratio of 27% compared to Target Corp's 55%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
COST vs TGT: which is better for retirement income?
It depends on your priorities. TGT for current income, COST for dividend growth, COST for safety. Many retirement investors hold both for diversification.
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