Target Yields Nearly 4 Times Walmart. Which Dividend Is Better for Retirement?

Target (NYSE:TGT | TGT Price Prediction) and Walmart (NASDAQ:WMT) both raised full-year guidance in August. Both also got a lift from tariff refunds. If you are retired or close to it, the bigger difference is how each pays you. Target offers a forward yield near 3.0%. Walmart yields about 0.79% and grows faster.

Shoppers Return to Target While Walmart Wins on Speed

Target posted comparable sales growth of 3.8% and traffic growth of 3.6%, so more shoppers came back through the stores. The increases came from categories Target rebuilt. Snack sales ran more than 15% ahead of last year, and LEGO sales rose more than 30%. Home and apparel are still lagging. Chief Merchandising Officer Cara Sylvester said, “We are not satisfied with the performance in either of those businesses.” EPS of $4.11 included a $1.65 one-time tariff refund, so the clean growth figure is lower.

Walmart’s revenue reached $187.94 billion, and adjusted EPS of $0.81 beat the $0.74 estimate. Its higher-margin side businesses grew faster: advertising rose 38% and membership fees climbed 17%. CEO John Furner said, “Speed isn’t simply a fulfillment metric, it’s an acquisition strategy.”

Target Pays You Now While Walmart Pays You Later

Target’s dividend uses up more of its free cash flow, especially with capex heading toward approximately $5 billion. Even so, it has raised the payout for more than 50 years, and its latest raise was a modest 1.8%. Walmart lifted its annual dividend to $0.99 from $0.94 and covers it comfortably. At a P/E near 46, though, you pay a steep price for that safety.

Home and Apparel Will Decide Whether Target’s Payout Feels Safe

My focus will be whether Target’s home and apparel sales start growing again. CEO Michael Fiddelke called them “high-margin categories,” so a recovery would ease pressure on the payout. Walmart plans to put its tariff refund back into lower prices, which will squeeze profits. It also faces more than $2 billion in extra fuel costs.

Why Target Stands Out for Retirement Income

For a retiree who lives on dividends, Target offers the higher current income (we laid out a dividend ladder built to produce lifelong income without selling shares in a free guide here: Never Touch the Principal). Its yield is far higher than Walmart’s, and more customer visits suggest the turnaround is real. I am still a little skeptical. The stock is up 61.8% this year but down 30.86% over five years, which tells me investors are still deciding whether the recovery will last.

Walmart has preferred total return over current income. Its shares are up 165.49% over five years. My view could change if Target’s free cash flow weakened while home and apparel sales kept falling.

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