Costco Wholesale (NASDAQ: COST) has captured the spotlight with its $15 special dividend, which will be paid to shareholders as of record at the close of business on Dec. 28. At first glance, a $15 per share special dividend seems like a lot. After all, that’s more than the stock price of some companies.
But at the time of this writing, Costco is a $661 stock. And even if we assume Costco slightly raises its ordinary dividend next year, it is still likely to pay less than $20 or even $19 per share in dividends — good for a forward yield under 3%.
Meanwhile, rival retailer Target (NYSE: TGT) has raised its dividend every year for over 50 years. It doesn’t pay special dividends. But its ordinary dividend alone has a forward yield of 3.2% — better than Costco without even relying on special dividends.
Here’s why Target is a better all-around buy…
