Target and Walmart have long been known for their rivalry in the budget-friendly retail market. Both are also top blue-chip stocks with a long history of smart money management and healthy, reliable dividend payouts. But if you only want to invest in one company in this space, which is the better buy?

The Case for Target

In some ways, Target is considered the higher-end budget retailer. This is largely due to the company’s strong focus on branding, as well as an ongoing commitment to the in-store shopping experience. It’s also building out omnichannel fulfillment through a unique “store as hub” model and leaning heavily into AI to further enhance the customer experience.

Target does have some financial troubles. It’s carrying a heavy debt load, and its revenue is expected to decline through 2025 before bouncing back in 2026. However, the AI initiative should help to lower costs. In addition, the company is known for its strong and consistent dividend payouts. They’ve risen every year since Target went public in 1967. Its yield is currently a healthy 3%. Target is relatively inexpensive, too, with shares trading at just 16 times forward earnings.

The Case for Walmart

Walmart is a behemoth that some people love, some hate, and some love to hate. Regardless of your personal feelings, though, there is no denying the company’s financial strength. Its debt-to-equity ratio is 75%. Its operating cash flow over the past year was about $35 billion. Importantly, Walmart is set to grow its top line by about 8.6% over the next two years.

However, Walmart’s dividend yield is relatively low, standing at just 1.19%, though the company has increased dividends annually since 1974. Walmart also has a higher valuation than Target, with shares trading at nearly 29 times forward earnings. Still, Walmart’s sheer scale and strong financials make the valuation fair.

So which should you buy? That largely depends on your goals. Target may be the smarter play if you’re looking for immediate income. Walmart could be the better choice if your goal is long-term, steady growth.

Neither Lisa Fritscher nor Stocks.News have positions in either of these companies.