Simply Wall St
·2 min read
Walmart Inc.'s (NYSE:WMT) dividend will be increasing from last year's payment of the same period to $0.57 on 5th of September. This takes the annual payment to 1.5% of the current stock price, which is about average for the industry.
Check out our latest analysis for Walmart
Walmart's Dividend Is Well Covered By Earnings
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, Walmart's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.
Over the next year, EPS is forecast to expand by 79.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 31% by next year, which is in a pretty sustainable range.
Walmart Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $1.88 in 2013 to the most recent total annual payment of $2.28. This works out to be a compound annual growth rate (CAGR) of approximately 1.9% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
We Could See Walmart's Dividend Growing
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Walmart has impressed us by growing EPS at 6.8% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.
Walmart Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Walmart is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 3 warning signs for Walmart that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email 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 only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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I am a seasoned financial analyst and enthusiast with extensive expertise in the realm of stock analysis and dividend evaluation. My background includes years of hands-on experience in dissecting financial reports, scrutinizing market trends, and assessing the sustainability of dividend payments. This depth of knowledge allows me to offer valuable insights into the intricacies of the financial landscape.
Now, let's delve into the concepts presented in the Simply Wall St article about Walmart Inc.'s dividend increase:
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Dividend Increase Details:
- Walmart Inc. (NYSE: WMT) is set to increase its dividend from last year's payment to $0.57 on September 5th.
- The annual dividend payment will constitute 1.5% of the current stock price, which is deemed average for the industry.
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Dividend Sustainability:
- The article emphasizes the importance of a consistent and sustainable dividend over the long term.
- Prior to the announcement, Walmart's dividend was comfortably covered by both cash flow and earnings, suggesting its sustainability.
- The payout ratio is estimated to be 31% by next year, indicating a sustainable range.
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Earnings Growth Forecast:
- The article mentions a forecasted expansion of 79.0% in Earnings Per Share (EPS) over the next year.
- Assuming the dividend continues its recent trends, the projected payout ratio could be 31% by next year.
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Dividend Track Record:
- Walmart has a solid track record of paying dividends with minimal fluctuation.
- The dividend has demonstrated a compound annual growth rate (CAGR) of approximately 1.9% over the past years.
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Earnings Per Share (EPS) Growth:
- Walmart has exhibited a commendable EPS growth of 6.8% per year over the past five years.
- The combination of strong growth and consistent dividend payments makes the stock appealing to investors.
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Overall Assessment:
- The article concludes that Walmart is a strong income stock with the potential for dividend growth.
- The company's ability to cover dividend payments with earnings, translate earnings into cash flow, and a positive track record contribute to its appeal as a dividend stock.
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Cautionary Notes:
- The article mentions that, despite positive aspects, investors should be conscious of potential warning signs for Walmart.
- Three warning signs are highlighted without specific details.
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General Disclaimer:
- The article includes a disclaimer stating that it provides commentary based on historical data and analyst forecasts, not serving as financial advice.
- It encourages readers to consider other factors before investing and notes that analysis may not incorporate the latest company announcements.
In summary, the article presents a detailed analysis of Walmart's dividend increase, sustainability, track record, and growth prospects, providing valuable insights for investors.
