Walmart Inc (NYSE:WMT) has pleased shareholders over the past 10 years, paying out an average dividend of 2.00% annually. The stock currently pays out a dividend yield of 2.47%, and has a market cap of US$248.93B. Let’s dig deeper into whether Walmart should have a place in your portfolio. Check out our latest analysis for Walmart
Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
- Is its annual yield among the top 25% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has it increased its dividend per share amount over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it be able to continue to payout at the current rate in the future?
How well does Walmart fit our criteria?
The current trailing twelve-month payout ratio for the stock is 68.06%, which means that the dividend is covered by earnings. However, going forward, analysts expect WMT’s payout to fall to 43.95% of its earnings, which leads to a dividend yield of 2.64%. However, EPS should increase to $4.59, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of WMT it has increased its DPS from $0.95 to $2.08 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Walmart has a yield of 2.47%, which is on the low-side for Consumer Retailing stocks.
Keeping in mind the dividend characteristics above, Walmart is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three relevant aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for WMT’s future growth? Take a look at our free research report of analyst consensus for WMT’s outlook.
- Valuation: What is WMT worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether WMT is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.