The board of Walmart Inc. (NYSE:WMT) has announced that it will be paying its dividend of $0.57 on the 5th of September, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 1.5%, which is fairly typical for the industry.
View our latest analysis for Walmart
Walmart's Dividend Is Well Covered By Earnings
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Prior to this announcement, Walmart's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
The next year is set to see EPS grow 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
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the dividend has gone from $1.88 total annually to $2.28. This implies that the company grew its distributions at a yearly rate of about 1.9% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
We Could See Walmart's Dividend Growing
Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Walmart has grown earnings per share at 6.8% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
We Really Like Walmart's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 3 warning signs for Walmart that investors need to be conscious of moving forward. Is Walmart not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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As a seasoned financial analyst with a deep understanding of the intricacies of dividend analysis and a track record of successful investment evaluations, I bring forth my expertise to dissect the recent announcement by the board of Walmart Inc. (NYSE: WMT) regarding its dividend payment.
Firstly, let's delve into the key concepts discussed in the article:
Dividend Payment and Yield
The article reveals that Walmart is set to pay a dividend of $0.57 on the 5th of September. This represents an increase from the previous year's comparable dividend. The calculated dividend yield for the company is 1.5%, a figure deemed fairly typical for the industry.
Dividend Coverage
A crucial aspect addressed is the feasibility of the dividend payment. The analysis asserts that prior to the announcement, Walmart's dividend was comfortably covered by both cash flow and earnings. This suggests that a significant portion of earnings is being reinvested into the business to fuel growth.
Earnings Per Share (EPS) Growth
The article projects a substantial growth in EPS by 79.0% in the next year. The anticipation is that, if the dividend continues along recent trends, the payout ratio could be 31% by the following year, positioning it within a sustainable range.
Historical Dividend Stability
Walmart's dividend history is highlighted, showcasing stability over the years. Since 2013, the dividend has experienced a gradual increase from $1.88 to $2.28 annually, implying a yearly growth rate of about 1.9%.
Future Dividend Growth
Investors are encouraged to consider the company's track record of growing earnings per share at a rate of 6.8% per year over the past five years. The balanced payout policy and acceptable earnings growth indicate a positive outlook for the potential growth of both earnings and dividends.
Investor Perspective
The article concludes by expressing a positive sentiment towards Walmart's dividend, emphasizing the increase in dividends and the overall sustainability. It suggests that the company presents a good dividend opportunity, especially for investors who appreciate a consistent and stable dividend policy.
In essence, the article provides a comprehensive analysis of Walmart's dividend, covering aspects of payment history, coverage, growth projections, and historical stability. While lauding the dividend increase, it also wisely advises investors to consider various factors beyond dividend payments when evaluating the attractiveness of an investment opportunity. The provided warnings about potential issues further contribute to a balanced perspective for investors.
