This morning I picked up 25 more shares of Target (TGT) bringing my total position up to 65 shares. I would still like to add more to the position over time but need the price to come down further before I would continue to average down. I feel that Target is set up for a long streak of growth of the company and in turn the dividend.
I purchased these shares for $60.23 each and they carry a YOC of 2.38% based on the current annual dividend payout of $1.44 per share. This batch of shares will provide an extra $36 in annual dividends before further increases or reinvestment. My total position in Target now has an average cost basis of $61.45 each, which is a 1.32% premium to my fair value calculation. This lowered my previous cost basis by 0.91% and brings the YOC for the position up from 2.32% to 2.34%. Unfortunately this also lowered my YOC for the entire portfolio from 2.88% down to 2.87% and my non-ESPP shares YOC from 3.25% to 3.22%.
Since I've started adding the potential returns based off my stock analysis calculations let's look at what I can expect from my position in Target assuming no reinvestment of dividends. Assuming that EPS and DPS grow at the rates I used in my stock analysis calculations, EPS in 2022 would be $8.79. Slapping a conservative 11 PE ratio on that gives a price of $96.75, a 57.44% return. Over the next 10 years I would have collected $27.84 in dividends which would be another 45.30% return, giving a total 10 year return of 102.74% which is good for a 7.32% annualized return.
My forward 12 month dividends now sits at $1,587.37.