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Dillard’s has handily beaten the market over the past five years, largely due to the retailer’s aggressive dividend and share repurchase efforts.
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Nexstar Broadcast Group could continue its dividend growth streak, thanks to potential cost synergies from a proposed merger.
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Target remains a solid dividend stock, and the recent emergence of shareholder activism at the retailer could help shares continue their rebound.
When it comes to dividend stocks, I like to consider multiple criteria, not just dividend yield, dividend growth record, or other factors. Focus too much on dividend yield, and you could become overexposed to potential yield traps.
Focus too much on dividend growth track record, and you may end up buying too many of the lower-yield dividend growth stars of yesteryear, forsaking any up-and-coming names offering higher forward yields that could be Dividend Kings in the making.
With this in mind, weighing yield against dividend growth history, as well as by dividend payout ratios, I have come across three stocks that, at today’s prices, seem like ideal choices for a dividend stock portfolio: Dillard’s (NYSE: DDS), Nexstar Broadcast Group (NASDAQ: NXST), and Target (NYSE: TGT).
Between December 2020 and December 2025, shares in department store retailer Dillard’s rallied more than 1,200%. With that level of outperformance, the stock not only handily beat the S&P 500 index, but Nvidia and Bitcoin as well.
Yes, a significant portion of Dillard’s substantial gains stemmed from the company’s post-COVID recovery. However, what has sustained the continued rally has been its aggressive share repurchase and dividend growth policies.
Dillard’s has a 15-year track record of dividend growth, with payouts increasing by an average of 12.9% annually over the last five years. Although it’s questionable whether this stock will rally another 11-fold between now and 2030, a 4.8% forward yield, coupled with further return of capital efforts, suggests further solid gains ahead.
Nexstar Media Group is America’s largest owner of broadcast television stations. Nexstar has successfully continued to maximize the profitability of these legacy media assets, largely through aggressive cost-cutting.
As a result, Nexstar has increased its dividend aggressively in recent years. Currently, the stock has a forward dividend yield of 3.5%, but a payout ratio of just 45%. Plenty of cash flow remains for debt repayment, share repurchases, as well as new acquisitions.
