Which Mega-Retailer Has the Safer Dividend: Target or Wal-Mart?

Which Mega-Retailer Has the Safer Dividend: Target or Wal-Mart?

Both Target Corporation (NYSE: TGT) and Wal-Mart (NYSE: WMT) had great quarters. Both mega-retailers had strong revenue results and profits, and they did better than most had expected in producing same-store sales growth. In comparison to early expectations for 0.4% at Target and and 1.8% at Wal-Mart, the two retailers reported comps gains of 0.9% and 2.7%, respectively.

However, the fortunes of both companies' stocks could not have been more different. Wal-Mart shares jumped nearly 10% in the post-announcement earnings session, but Target stock fell by a similar amount. The difference was due to guidance: Target projected a worse fourth quarter that investors had expected, while Wal-Mart raised its full-year outlook. 

Wal-Mart currently yields 2.3%, while Target yields 4.2%. Should you choose the lower yield with a better forecast or a higher yield with a worse outlook?

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Source: Fool.com