Assessing the sustainability and growth of Walmart’s dividend payments
Walmart Inc. (NYSE:WMT) recently announced a dividend of $0.57 per share, payable on January 2, 2024, with an ex-dividend date of December 7, 2023. The company’s dividend history, yield, and growth rate are also in focus as investors look forward to future payouts. Let’s examine Walmart’s dividend history and evaluate its sustainability using data from GuruFocus.
What does Walmart Inc. do?
Walmart serves as the preeminent retailer in the United States, and its strategy is predicated on superior operating efficiency, providing consumers with the lowest prices and driving strong store traffic and product turnover. Wal-Mart opened its first supercenter in 1988, reinforcing its low-cost business strategy by providing a convenient one-stop shopping destination. Currently, Walmart operates more than 4,700 stores in the United States (5,300 stores including Sam’s Club) and more than 10,000 stores worldwide. Walmart generated more than $420 billion in domestic namesake sales last year, and Sam’s Club contributed an additional $84 billion to the company’s sales. Internationally, Walmart made her $100 billion in sales. The company serves approximately 240 million customers worldwide each week.
A glimpse of Walmart’s dividend history
Walmart Inc. (NYSE:WMT) has maintained a consistent dividend payment record since 1975. Dividends are currently distributed on a quarterly basis. Walmart Inc. has increased its dividend every year since 1975, earning it Dividend Aristocrat status. This prestigious title is awarded to companies that have increased their dividends for at least 48 consecutive years. Below is a graph of annual dividends per share to track historical trends.
Analyzing Walmart’s dividend yield and growth
As of today, Walmart’s 12-month forward dividend yield is 1.47% and the 12-month forward dividend yield is 1.48%. This suggests that dividend increases are expected over the next 12 months. However, Walmart’s dividend yield of 1.47% is near the lowest in a decade and underperforms its global competitors in the retail and defense industry, making the company’s dividend yield an attractive proposition for income investors. suggests that it is possible.
Walmart’s annual dividend growth rate over the past three years was 1.90%. Extending to a five-year period did not change this proportion. Also, over the past 10 years, Walmart’s annual dividend growth rate per share has been 2.70%. Based on Walmart Inc.’s dividend yield and his five-year growth rate, his five-year cost yield on Walmart Inc. stock as of today is approximately 1.62%.
Questions about sustainability: Dividend payout ratio and profitability
To assess dividend sustainability, you need to evaluate a company’s payout ratio. Dividend payout ratio helps determine the proportion of a company’s profits that it distributes as dividends. A low ratio indicates that the company is retaining a significant portion of its earnings, thereby ensuring that it has funds for future growth or unexpected economic downturns. As of October 31, 2023, Walmart’s dividend payout ratio is 0.38.
Walmart Inc.’s profitability rank helps you understand the company’s profitability compared to its peers. GuruFocus ranks Walmart’s profitability at 7th out of 10 as of October 31, 2023, suggesting a positive outlook for profitability. The company has reported positive net income every year for the past 10 years, further cementing its strong profitability.
Growth indicators: future outlook
To ensure dividend sustainability, companies must have solid growth metrics. His growth rank of 7 out of 10 for Walmart suggests that the company’s growth trajectory is favorable compared to its competitors. Earnings are the lifeblood of any company, and combining Walmart’s earnings per share with his three-year earnings growth rate shows a strong earnings model. Walmart Inc’s revenue is growing at an average annual rate of about 7.00%, which is higher than about 59.03% of its global competitors.
The company’s three-year EPS growth rate indicates its ability to grow earnings, which is a key factor in maintaining a dividend over the long term. Over the past three years, Walmart Inc.’s revenue has grown on average by about -6.30% per year. This is approximately 17.53% higher than its global competitors. Finally, the company’s 5-year His EBITDA growth rate is 8.70%, which is higher than around 43.43% of its global competitors.
next step
In conclusion, Walmart Inc. (NYSE:WMT) has a solid dividend history as a Dividend Aristocrat, with consistently increasing dividend payments. Although the current yield is near a 10-year low, the company’s stable payout ratio and high profitability rank suggest the dividend is sustainable. Additionally, Walmart’s solid growth metrics provide good prospects for future earnings and dividend growth potential. Walmart may be an attractive option for investors looking for a reliable source of income and long-term growth. For more investment opportunities, GuruFocus Premium users can screen for high dividend yield stocks using the High Dividend Yield Screener.
This article created by GuruFocus is intended to provide general insight and is not intended as financial advice. Our commentary is based on historical data and analyst forecasts using an unbiased methodology and is not intended to serve as specific investment guidance. It does not constitute a recommendation to buy or sell stocks, and does not take into account your individual investment objectives or financial situation. Our objective is to provide fundamental data-driven analysis over time. Please note that our analysis may not incorporate the latest announcements or qualitative information from price-sensitive companies. GuruFocus has no position in the stocks mentioned herein.
This article first appeared on GuruFocus.