Income investors love dividend aristocrats, those elite companies that have hiked their dividends annually for over 25 years. But with the market near all-time highs, many dividend aristocrats are trading at high valuations with historically low yields.

However, two stocks with high yields and low valuations stand out: Target (NYSE:TGT), which has raised its dividends annually for 49 straight years, and Tanger Factory Outlets (NYSE:SKT), which could become a dividend aristocrat next year with its 25th straight dividend hike.

Four piggybanks.

Source: Getty Images.

What do Target and Tanger Factory Outlets do?

Shares of Target and Tanger respectively fell about 20% and 30% this year, compared to the S&P 500's 11% growth. Those declines were mainly attributed to competition from Amazon (NASDAQ: AMZN) and sluggish brick-and-mortar traffic wreaking havoc across the retail sector.

Target has 1,816 stores and 39 distribution centers in the US, making it the second largest discount retailer in the country after Wal-Mart (NYSE:WMT). While Wal-Mart relies on an "everyday low prices" strategy, Target focuses on younger shoppers with more furniture, clothes, and exclusive designer merchandise. Target's retail formats include the discount store Target, the hypermarket SuperTarget, and other "flexible format" Target stores.

Tanger Factory Outlets owns 43 outlet shopping centers across the United States and Canada. These properties are leased to over 3,100 stores operated by over 500 different brand name companies. Its outlets attract over 188 million shoppers annually. Tanger is an REIT (real estate investment trust), which must pay out at least 90% of its taxable income (not to be confused with earnings per share) as dividends to qualify for favorable tax rates.

How fast is Target growing?

Target posted 1.6% annual sales growth last quarter, which finally broke a six-quarter streak of consecutive declines. Target attributed that improvement to positive comps growth at its apparel, home, essentials, and hardline (electronics, music, movies, books, software, sporting goods, and toys) departments.

A Target advertising campaign.

Source: Target.

However, those gains were partly offset by flat comps growth at its food and beverages department, which faces tough competition from supermarkets, Wal-Mart, and Costco. Amazon's recent purchase of Whole Foods Market could exacerbate that pain, since grocery sales accounted for 21% of its revenue during the first half of the year.

On the bottom line, Target's adjusted earnings rose just 0.1% during the quarter, as it relied more on promotions to drive its top line growth. Analysts expect Target's revenue to rise 1.8% this year, but for its earnings to fall 10%.

How fast is Tanger growing?

Unlike Target, Tanger hasn't posted a quarter of negative sales growth in recent years. Its revenue rose 7.4% annually last quarter, and analysts expect 4% sales growth this year. Tanger's growth doesn't depend on product sales -- it merely needs to collect the rent and make sure that occupancy rates remain high.

Tanger's blended average base rental rates -- excluding eight leases undergoing remerchandising projects -- rose 11.7% annually last quarter. With the inclusion of those eight leases, its rental rates rose 7.9%. Its consolidated occupancy rate was at 96.1% at the end of the quarter. Tanger also hiked the average base rent by 10.1% on renewed leases in the first six months of the year -- indicating that it can still raise the rent while keeping occupancy rates well above 95%.

A Tanger Factory Outlets location.

Source: Tanger Factory Outlets.

However, the bears will note that Tanger's occupancy rate actually dipped from 96.2% in the first quarter and 96.9% in the prior year quarter -- indicating that Tanger isn't as immune to the retail downturn as some bulls believe. Moreover, increased costs of remerchandising and building new centers are expected to cause its earnings to fall 13% this year before rebounding next year.

The dividends and valuations

Target currently pays a forward yield of 4.3%. It spent just 48% of its earnings and 28% of its free cash flow on those payments over the past 12 months, so it has plenty of room for future hikes. Tanger pays a forward yield of 5.7%, which used up 88% of its earnings and 213% of its free cash flow over the past 12 months. Those ratios seem high, but we should remember that REITs are required to pay out most of their earnings as dividends.

Target currently trades at 12 times earnings, which is lower than the industry average of 19 for discount stores. Tanger has a slightly higher P/E of 16, but that's also well below the average P/E of 35 for retail REITs.

The winner: Tanger

Target looks cheap, but Tanger's business of renting out stores in its outlet centers -- a niche market which is hard for Amazon to touch -- is more dependable than Target's superstore model. Tanger could be hit by lower occupancy rates, but Target could be squeezed by Wal-Mart and Amazon on the superstore, e-commerce, and grocery fronts -- which makes the former a much safer income play than the latter.