A Once-in-a-Decade Opportunity: 1 Super S&P 500 Stock Down 65% to Buy After Its Recent Pullback

Shares of Target (NYSE: TGT) have declined a massive 65% since hitting a peak in 2021. That's a painful decline, but not actually all that unusual. The stock has lost 50% or more of its value three times in the last 30 years.

If you have a long-term investment horizon, and a strong stomach, now could be a once-in-a-decade opportunity to buy this iconic retailer.

Image source: Getty Images.

You don't become a Dividend King by accident

When looking at Target today there is one achievement that stands out. It has increased its dividend annually for more than five decades, making it a Dividend King. That's no small achievement; the only other retailers to have similarly impressive records are Genuine Parts, Lowe's, and Walmart (NYSE: WMT). Target is No. 3 on the list, with Walmart showing up at No. 4. And only a portion of Genuine Parts' business is retail focused, as the core of its operation is making replacement auto parts.

All in, Target is an elite retailer. The key comparison point among these four companies, however, is very clearly Walmart, which has the most similar business. Genuine Parts and hardware store Lowe's are both specialty retailers. But Target and Walmart have a material difference in the way they operate their stores. Walmart focuses on "everyday low prices" and Target tries to provide a more premium experience and product assortment.

That basically means that Walmart doesn't delve into trends and fashion styles nearly as deeply as Target. Walmart is more of a basics business, while Target can, and has, made merchandising missteps that have left it out of favor with consumers. Target also tends to feel the pinch a bit more during periods of economic concern, like recessions, when consumers trade down to the cheapest possible retail options.

In some ways, the fact that Target is a Dividend King at all is a huge statement about the company's enduring strength as a business. In fact, what's interesting right now is that the trailing-12-month dividend payout ratio is currently around 50%. That suggests that the dividend is probably safe despite the massive stock price decline.

What's going on right now?

And yet Target's stock has indeed fallen massively, pushing the dividend yield up to a historically high 5%. If the company pulls off another business turnaround, as it has several times before over the past 50 years, you could not only end up collecting a huge income stream, but also be in line for material capital appreciation. This is very possibly a once-in-a-decade opportunity for dividend investors to get into Target.

Remember, dividends are paid at the discretion of the board of directors. So a cut is always possible. But the board raised the dividend in mid-2025, well aware of the problems the retailer has been facing. Sure, it was a token 1.8% increase, but the statement is very clear: The board of directors believes Target's future remains bright.

The board also brought in a new CEO to shake things up and help push for change. Another change that's taken place is in Target's approach to overseeing the company, from a one-person strategy to a team. It's unlikely that there's going to be a sudden turnaround in the business, but given the history it seems highly likely that Target will get back on track.

Target's story will take some time to play out

To be fair, risk-averse investors might want to avoid Target. It is still dealing with difficult consumer trends that favor Walmart's everyday low price model. But if you think in decades and not days, and love dividends, you should do a deep dive on Target right now. This could be a huge opportunity for you to lock in a great yield with what has long been an elite retailer.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target and Walmart. The Motley Fool recommends Genuine Parts and Lowe's Companies. The Motley Fool has a disclosure policy.