This global retailing giant has consistently increased its annual dividend rate for 51 years including a recent 9.2% boost. The company’s track record looks sound as online sales are up 22% and repeat visits are frequent due to high demand for groceries.
As part of that strategy, the company recently agreed to buy consumer electronics manufacturer Vizio. Walmart has little interest in making TV sets. Rather, it plans to use Vizio’s online streaming platform to better reach online shoppers.
Overall sales surged 6.0% in the most recent quarter and advertising revenue is another growth factor with a 26% gain. Growth like this is why this is one of our top picks.
Meanwhile, the stock trades at 25.7 times the company’s forward earnings forecast, a reasonable multiple considering its market dominance. The shares have consistently outperformed the S&P500 including this year’s 32.1% gain so far.
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WALMART INC. (New York symbol WMT; www.walmart.com) is the world’s biggest retailer, with over 10,500 outlets in 19 countries. Those stores serve a total of 255 million customers each week.
Walmart’s 4,615 locations in the U.S., and the related websites, supplied 69% of the retailer’s total sales in the latest fiscal year.
The company first offered investors global exposure in 1998 when it opened a store outside the U.S. and Canada, through a joint venture with a Mexican retailer. Walmart’s international unit (18% of total sales) now operates 5,402 stores, including 3,006 in Mexico and 403 in Canada.
The remaining 13% of sales come from its Sam’s Club warehouse stores; they sell a variety of goods at wholesale prices. There are now 599 locations across the U.S.
Groceries supply roughly 60% of Walmart’s U.S. sales. That encourages repeat visits, which cuts investor risk. General merchandise accounts for a further 25% of its sales, while other items (mainly health and wellness products) supply the remaining 15%.
Walmart is also profiting from some of its smaller investments. For example, it owns roughly 8% of Ibotta Inc. (New York symbol IBTA), which operates mobile and online apps to provide shoppers with special offers and the ability to earn cash rewards.
Ibotta recently completed an initial public offering. As a result, Walmart’s stake is now worth about $250 million.
Walmart also recently paid $3.5 billion to increase its stake in Flipkart, a leading online retailer in India, from 75% to 85%. An IPO could value Flipkart at roughly $35 billion; so Walmart’s stake would be worth about $30 billion. Selling those shares would free up even more cash for new investments in its stores and online operations.
Blue Chip Stocks: Inflation will keep driving both in-store and online sales
Walmart continues to benefit as inflation draws more shoppers to its value-focused stores, particularly for groceries and health products. It’s also profiting from stronger e-commerce sales, as well as higher advertising revenue (such as selling ads on screens in its self-checkout lanes).
(Note—All per-share amounts reflect Walmart’s 3-for-1 stock split, which took effect on Monday, February 26, 2024.)
In the fiscal 2025 first quarter, ended April 30, 2024, sales rose 6.0%, to $161.51 billion from $152.30 billion a year earlier. That beat the consensus forecast of $159.50 billion.
Walmart’s U.S. same-store sales (including online) rose 3.8%. That was entirely due to a higher number of transactions (up 3.8%), which offset no change in selling prices. As well, U.S. online sales jumped 22% while advertising revenue rose 26%.
If you factor out gains and losses on investments and other unusual items, earnings per share rose 22.4%, to $0.60 from $0.52. That also topped the consensus estimate of $0.52 a share.
Walmart now expects its sales (excluding businesses it recently sold and currency rate fluctuations) for fiscal 2025 will rise about 4.0%. The retail giant should also earn about $2.37 a share for the full year. The stock, which hit a new all-time high of $65.69 this week, trades at 25.7 times that estimate. That’s an acceptable p/e in light of its high market share and fast-growing online business.
With the April 2024, payment, Walmart raised your quarterly dividend by 9.2%. Investors will then receive $0.2075 a share instead of $0.19. The new annual rate of $0.83 yields 1.2%.
Walmart has now raised the annual dividend rate each year for the past 51 years. Over the past five years, that payment has increased at an average annual rate of 3.3%. The stock holds a Highest TSI Dividend Sustainability Rating.
Recommendation in Wall Street Stock Forecaster: Walmart Inc. is a buy.
