Target on Wednesday revealed it is doubling the amount of its share repurchase program, to $10 billion from $5 billion.
The retailer also declared a quarterly dividend of 56 cents a share, a 7.7 percent increase from the prior quarterly dividend of 52 cents. The third-quarter dividend is payable Sept. 10 to shareholders of record as of close of business on Aug. 19 and is the 192nd consecutive dividend Target has paid since October 1967.
The announcements continue Target’s “history of thoughtfully returning cash to shareholders through dividends and share repurchase,” said John Mulligan, the company’s executive vice president and chief financial officer. “Given our outlook for capital expenditures and the strong generation of cash in our core business, we expect to continue increasing our dividends and buying back shares.”
“We believe that the $5 billion increase in Target’s share repurchase authorization, while a credit negative, is an indication that management feels confident enough in the company’s medium-term prospects to begin making proportional returns to its shareholders, especially with Canada now firmly in the rear view mirror,” said Charlie O’Shea, vice president of Moody’s. “We expect Target to be prudent in the cadence of these repurchases, limiting any borrowings so that it remains comfortably within our downgrade triggers, which represent our band of tolerance for the A2 rating, and also ensuring that maximum financial flexibility is maintained. We also note that at the end of the first quarter, Target was carrying over $2.7 billion in cash and short-term investments.”