board of directors of Walmart Co., Ltd. (NYSE:WMT) announced that it will pay a $0.57 dividend on January 2nd. This is an increase over last year’s equivalent dividend. This would result in an annual payout of 1.4% of the current stock price, which is about the industry average.
Check out our latest analysis for Walmart.
Walmart’s profits easily cover distributions
It’s always good to have a solid dividend yield, but you also need to consider whether you can afford the payments. Prior to this announcement, Walmart’s dividend was comfortably covered by both cash flow and earnings. This suggests that much of the profits are being reinvested into the business to drive growth.
Next year, EPS is expected to increase by 52.2%. If dividends continue in line with recent trends, the dividend payout ratio is expected to be 29%, which is within a sufficiently satisfactory range for dividend sustainability.
Walmart has a proven track record.
The company has been paying dividends for a long time and is very stable, so we are confident in its future dividend potential. For the past 10 years, he has been paid $1.88 per year in 2013, and for the most recent fiscal year, he has been paid $2.28. This works out to be a compound annual growth rate (CAGR) of approximately 1.9% over that period. There’s no denying that the dividend has been remarkably stable in the past, but growth has slowed considerably.
Dividends are likely to increase
Some investors may be chomping at the bit to buy the company’s stock based on its dividend history. It’s encouraging to see that Walmart has grown its earnings per share at 24% per year over the past five years. We think Walmart has the potential to be a strong dividend payer, as the company’s earnings per share have grown rapidly in recent years and it has a good balance between reinvestment and dividends to shareholders.
We really like Walmart’s dividend
Overall, we think this could be an attractive income stock, and this year’s dividend increase should make the stock even better. The company easily earns enough to cover its dividend payments, and it’s great to see these earnings converting into cash flow. Considering all these factors, we think this has solid potential as a dividend stock.
Market movements prove how highly valued a consistent dividend policy is compared to a more unpredictable dividend policy. At the same time, there are other factors that readers should be aware of before pouring capital into stocks. I took the discussion a little further and found the following: 1 Warning Sign for Walmart That means investors need to be conscious moving forward.Looking for more high-yield dividend ideas? Try ours A group of people with strong dividends.
Valuation is complex, but we help make it simple.
Check out our comprehensive analysis, including below, to see if Walmart is potentially overvalued or undervalued. Fair value estimates, risks and caveats, dividends, insider trading, and financial health.
See free analysis
Have feedback on this article? Curious about its content? contact Please contact us directly. Alternatively, email our editorial team at Simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.