Target (NYSE:TGT) has taken its bull's-eye logo and slapped it on the backs of its shareholders. That's a good thing in this case, because it means the business will be returning more cash to shareholders.

The first way Target is returning a little extra moola is by raising its quarterly dividend from $0.12 per share to $0.14 per share. While two cents doesn't sound so impressive on the surface, it's a nice 16.7% increase.

The second way Target is returning funds to shareholders is slightly more interesting. The company is increasing its authorized share buyback from $5 billion to $8 billion. The company had already used $4 billion of its original $5 billion over the last three years, and the increase will leave it with $4 billion to put to work. The remaining authorization gives the company the opportunity to reduce its share count by approximately 7% and increase per-share profits for shareholders who stick around.

Since January 2004, Target has gradually worked its diluted share count down from 919.2 million to 864.9 million, or 6.3%. Thus far the repurchases have been good for shareholders, because improving margins have allowed the company to improve its returns on capital. Future repurchases should actually be more beneficial for shareholders assuming the company is able to continue increasing returns on capital and opportunistically execute this repurchase authorization.

Target will still have to slug it out with Wal-Mart (NYSE:WMT), Costco (NASDAQ:COST), and Sears Holdings (NASDAQ:SHLD). But it has so far done well competing against these giants, so there is little reason to think it won't be able to continue doing so in the near term.

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Nathan Parmelee owns shares of Costco. The Motley Fool has an ironclad disclosure policy. Wal-Mart is a Motley Fool Inside Value selection. Costco is a Motley Fool Stock Advisor selection.