Retail giant Target Corp. (NYSE: TGT) is a popular High Yield Wealth recommendation. It’s also a core holding of my personal portfolio.

I’ve long appreciated Target’s intelligent management and its ability to create long-term shareholder value.

Annual per-share dividend increases in the 15%-to-20% range are also nice. They provide a rising income that keeps the share price rising.

[ad#Google Adsense 336×280-IA]Ascendency isn’t without its occasional detour. This time last year, Target’s shares were in the red.

The company was reeling under an embarrassing data breach, lackluster sales, and an ambitious Canadian expansion. Investors were irritated.

Target’s shares dropped more than 20% over the waning months of 2013 into 2014.

While others were selling, I was buying. I saw an opportunity to pick up yield in a blue-chip dividend grower. Based on Target’s long and exemplary history, I expected management would right a listing ship.

Decisive Action

My expectations have been affirmed. Management aggressively addressed the issues: The company immediately improved security and aggressively moved to stem the sales decline. In the second half of 2014, Target’s shares rallied, and are up roughly 25% since my initial recommendation.

The board’s decisive move to improve management impressed me most. The head of Canadian operations was let go. The CEO soon followed. There was no equivocating. Change was needed, and change was made.

The board then immediately hired Brian Cornell, a retailing veteran with an impressive resume. Cornell ran Sam’s Club, Michaels Companies (NASDAQ: MIK), and PepsiCo’s (NYSE: PEP) U.S. operations.

Cornell was a smart hire. He was an outsider, so he wasn’t tethered to past decisions. To Cornell, Target’s sunk costs were sunk. Past decisions would not shade economic reality.

The economic reality was that Canada would never work. A couple weeks ago, Cornell shocked investors, stating Target would shutter its 133 stores in Canada. In response to the new reality, Target will take a $5.4 billion charge to account for the loss on its ill-conceived investment.

This all sounds terrible, but Target shares popped nearly 4% after the announcement. Smart investors knew that it was pointless for Target to toss good money after bad. Better to simply learn an expensive lesson and move on.

Target is moving on to focus on its core U.S. operations, which are improving. At the time Target announced it was leaving Canada, it announced it was raising its 2014 fourth-quarter forecast. Total sales growth has been increased to 3% from 2%. Earnings guidance has been lifted to $1.47 per share from $1.43.

A Pop for Target Stock

Profitable growth is the upside of focusing on U.S. operations. New England, in particular, remains bereft of Target stores relative to the rest of the country. To grow in New England and other more urban areas, Target is introducing TargetExpress, a new format of smaller stores that should help drive growth where real estate is expensive and population is dense. The initial response looks promising.

Thanks to Target’s move to jettison Canada and other positive operational moves, more analysts have taken a shine to Target. In the past month, estimates for fiscal-year 2014 have been increased an average 27% to $4.10 per share. Estimates for 2015 have been increased an average 18% to $4.60 per share.

Target shares popped in January. Don’t be surprised if they pop again in February. Target reports earnings on Feb. 26. The company has delivered positive earnings surprises in each of the past four quarters. With positive earnings surprises frequently come positive share-price movements.

— Steve Mauzy

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Source: Wyatt Investment Resarch