Target's Dividend Sustainability Under Pressure Amid Rising Capex and Declining OCF

Target's Dividend King status is under pressure as its FCF payout ratio surged to 72.4% in FY2026 due to a 28.92% increase in capital expenditures and a decline in free cash flow. The dividend remains safe if sales momentum holds and capex spending normalizes. However, weak consumer sentiment and declining operating cash flow create headwinds. Management expects recovery in FY2027 after seeing positive February sales.