Target Corp. increased its dividend 7.7 percent to 56 cents a share and boosted its stock buyback plan by $5 billion, rewarding investors after profit topped estimates last quarter.
The next quarterly dividend, which met analysts’ estimates, will be paid Sept. 10 to shareholders of record at the close of Aug. 19, Target said in a statement Tuesday. The stock buyback program was increased to a total of $10 billion.
The move follows better-than-projected earnings last quarter, when cost cuts helped the retailer improve results. Since taking the reins in August, Chief Executive Officer Brian Cornell has shut down Target’s Canadian unit and slashed jobs at its headquarters in Minneapolis. He plans to revive growth at the discount chain by offering more health food and wellness products while also opening smaller stores for city-dwellers.
“Today’s announcements reinforce Target’s long history of thoughtfully returning cash to shareholders through dividends and share repurchase,” Chief Financial Officer John Mulligan said in Tuesday’s statement. “We expect to have the capacity to increase our annual dividend -- and repurchase billions of dollars of Target shares annually -- while maintaining our current credit ratings.”
The announcement sent Target’s stock into positive territory following a decline earlier in the session. As of 3:27 p.m. in New York, it was trading up 0.1 percent at $78.95. The shares climbed 3.9 percent this year through Monday’s close.
Revenue increased 2.8 percent in the first quarter to $17.1 billion. Comparable-store sales, which measure established locations, rose 2.3 percent, matching projections.
Excluding some items, earnings amounted to $1.10 a share in the period, which ended May 2. Analysts had predicted $1.02 on average, according to data compiled by Bloomberg.