2 Smart Dividend Stocks to Buy and Hold

Many stocks pay dividends, but dividend investors should be picky. Ideally, a reasonable dividend yield should be paired with a long dividend track record, plenty of profits to support the dividend, and decent long-term growth prospects.

Two smart dividend stocks to buy right now are Tanger (SKT -0.33%) and Target (TGT -3.01%). While both companies operate in the retail sector and are exposed to risks posed by tariffs and inflation, there’s a lot to like for dividend investors willing to buy and hold for years.

Smart acquisitions driving growth

Tanger operates 42 outlet centers and open-air retail centers across the U.S. and Canada. While occupancy rates plunged during the pandemic’s height and took time to bounce back, Tanger recorded its highest occupancy rate in more than a decade in 2024. More than 40% of Tanger’s rental base will come due for renewal over the next two years, presenting ample opportunities to drive rents higher.

Beyond rent growth from existing properties, Tanger has been growing its property portfolio through smart acquisitions. Two examples: The company paid $73 million for an open-air shopping center in Little Rock, Arkansas last December and $167 million for a mixed-use center in Cleveland, Ohio earlier this month. Both properties have low occupancy rates that can be expanded, and there are opportunities to improve the tenant mix and push rents higher as well.

Tanger is making these deals while keeping its balance sheet in good shape. That’s important for dividend investors, as interest eats up cash that could otherwise be returned to shareholders. Tanger had $1.5 billion in net debt at the end of 2024, with most of it at fixed rates and unsecured. There are no more debt maturities this year to worry about, and maturities will be safely spread out over the next few years. Tanger is still exposed to interest rate risk, but there won’t be a sudden shock if interest rates shoot higher.

Tanger currently pays a quarterly dividend of $0.275 per share, which works out to a forward dividend yield of about 3%. The dividend was well covered by funds from operations in 2024, consuming just 51% of that profitability metric. Tanger expects core funds from operations (FFO) to grow by as much as 8% in 2025, so a modest dividend hike is likely on the table.

While Tanger doesn’t offer the highest dividend yield, the retail outlet operator can increase that dividend over time by driving up rents and acquiring new properties with potential for improvement. An economic downturn could temporarily derail the company’s growth, but given how well it navigated the pandemic, investors shouldn’t be too worried. Tanger stock has exploded higher over the past few years, but it still looks like a solid buy.

Solid sales growth

Retailer Target put up decent holiday sales numbers, with November and December comparable sales rising by 2%. Digital sales were up 9%, driven by 30% growth in same-day delivery. Store traffic jumped 3%, and both Black Friday and Cyber Monday set records for the company. Notably, Target saw improving demand for discretionary categories, including apparel and toys. These have been problem areas for the retailer as of late.

For 2024, Target expects to produce adjusted earnings per share between $8.30 and $8.90, which puts the price-to-earnings ratio at about 15. In 2025, the company may face some challenges as its rollback of diversity, equity, and inclusion initiatives draws backlash. However, the effect remains unclear.

Target currently pays a quarterly dividend of $1.12 per share, which works out to a forward dividend yield of roughly 3.5%. The company has paid quarterly dividends uninterrupted since 1967. While that’s not a guarantee of dividend safety, a long dividend track record is always a good thing.

Target does face a potentially challenging environment as tariffs and inflation make things complicated. Competitor Walmart delivered disappointed guidance for 2025, saying that it would not be immune from tariffs. Target’s own outlook may be equally rough when it reports its fourth-quarter results.

Shares of Target are down more than 50% from their all-time high. With a solid dividend and improving sales in key categories that have been dragging down the company’s results, Target stock looks attractive for long-term dividend investors who can persevere though what may be a tough 2025.