Walmart Inc's Dividend Analysis
Exploring the Sustainability and Prospects of Walmart Inc's Dividend
Walmart Inc (NYSE:WMT) recently announced a dividend of $0.21 per share, payable on 2024-04-01, with the ex-dividend date set for 2024-03-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Walmart Inc's dividend performance and assess its sustainability.
What Does Walmart Inc Do?
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Walmart serves as the preeminent retailer in the United States, with its strategy predicated on superior operating efficiency and offering the lowest priced goods to consumers to drive robust store traffic and product turnover. Walmart augmented its low-price business strategy by offering a convenient one-stop shopping destination with the opening of its first supercenter in 1988. Today, Walmart operates over 4,600 stores in the United States (5,200 including Sam's Club) and over 10,000 stores globally. Walmart generated over $440 billion in domestic namesake sales in fiscal 2024, with Sam's Club contributing another $86 billion to the firm's top line. Internationally, Walmart generated $115 billion in sales. The company serves around 240 million customers globally each week.
A Glimpse at Walmart Inc's Dividend History
Walmart Inc has maintained a consistent dividend payment record since 1975, distributing dividends on a quarterly basis. The company has increased its dividend each year since 1975, earning the status of a dividend aristocrata distinction given to companies that have raised their dividends for at least 49 consecutive years. Below is a chart showing the annual Dividends Per Share for tracking historical trends.
Breaking Down Walmart Inc's Dividend Yield and Growth
As of today, Walmart Inc currently has a 12-month trailing dividend yield of 1.25% and a 12-month forward dividend yield of 1.37%. This suggests an expectation of increased dividend payments over the next 12 months. However, Walmart Inc's dividend yield of 1.25% is near a 10-year low and underperforms 82.91% of global competitors in the Retail - Defensive industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
Over the past three years, Walmart Inc's annual dividend growth rate was 1.80%. Extended to a five-year horizon, this rate increased to 1.90% per year. And over the past decade, Walmart Inc's annual dividends per share growth rate stands at 1.90%. Based on Walmart Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Walmart Inc stock as of today is approximately 1.37%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-01-31, Walmart Inc's dividend payout ratio is 0.18.
Walmart Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Walmart Inc's profitability 8 out of 10 as of 2024-01-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Walmart Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Walmart Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Walmart Inc's revenue has increased by approximately 6.90% per year on average, a rate that outperforms approximately 58.82% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Walmart Inc's earnings increased by approximately 11.90% per year on average, a rate that outperforms approximately 50.83% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 15.20%, which outperforms approximately 63.79% of global competitors.
Next Steps
In conclusion, Walmart Inc presents a mixed bag for dividend investors. While it boasts a long history of consistent dividend payments and modest growth rates, its current yield is relatively low compared to industry peers. However, the company's strong profitability and growth metrics suggest potential for future dividend increases. Investors should weigh Walmart Inc's dividend sustainability, indicated by a low payout ratio and positive net income, against the backdrop of its overall financial health and growth prospects. With careful consideration, Walmart Inc may still be a valuable addition to a dividend-focused portfolio. For those seeking high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener to discover potential investment opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
