Dividend Aristocrat Overview: Walmart

Photo: Flickr.com/JeepersMedia

About Walmart

Walmart is the largest retailer in the world, employing 2.2 million associates in Walmart and Sam’s Club Warehouse Stores across 27 countries and selling to 130 million customers each week.  In 1945, Sam Walton founded Ben Franklin stores as the initial instance of his discount store concept.  The first Wal-Mart opened in 1962.  Over time, as Walton improved his stores, he expanded rapidly from his home base of Bentonville, Arkansas into Missouri, Kansas and Oklahoma, and later into Louisiana and Tennessee.  The focus of the company’s expansion was to provide service to smaller communities and, by 1978, all the “Wal-Mart Discount City” stores and Ben Franklin stores were within a 400-mile radius of Bentonville.

In 1983, Walmart opened their first 3 Sam’s Club Warehouses; the company had a total of 642 stores in operation at the end of Fiscal Year 1983 and had expanded across the southeast to Florida and as far north as Iowa.  The company continued to expand across the United States and opened its first international location – a Sam’s Club – in 1991 through a joint venture with Cifra.  The company has continued to expand and operates over 4,000 stores in the U.S. and over 10,700 worldwide.

Walmart began trading over the counter in 1970 and was listed on the New York Stock Exchange on August 25, 1972.  Walmart began paying dividends later that year and has paid dividends each year since then.

The company is a member of the S&P 500 index and a Fortune 500 company, and trades under the ticker symbol WMT.

Walmart’s Dividend and Stock Split History

Walmart Dividends

Walmart’s dividend growth has slowed recently. The company sports a 5-year dividend growth rate of 6.5%.

Walmart has paid dividends since coming public in 1972 and has a record of dividend growth stretching back to 1973. The company’s distributes dividends by fiscal year, which runs from February 1st to January 31st. The company traditionally announces the dividends for the full fiscal year in February and pays dividends in the months of April, July, October, and January to shareholders of record in March, June, September, and December. (For purposes of the information below, I will go by the calendar year not Walmart’s fiscal year.)

In February 2016, the company announced a dividend increase of 2.0%, from $1.96 to $2.00 per share. This was the third straight year of 2% dividend increases. The company has a 5-year Compounded Annual Dividend Growth Rate (CADGR) of 6.50%. Longer term CADGRs are better, with 10-year and 20-year dividend growth rates of 11.56% and 15.61%, respectively. Finally, Walmart’s 25-year CADGR is 16.39%.

Walmart has split its stock 10 times since going public in 1972; each was a 2-for-1 stock split. Stock splits occurred in March 1972, August 1975, December 1980, June 1982, June 1983, September 1985, June 1987, June 1990, February 1993, and March 1999.

Over the 5 years ending on December 31, 2015, Walmart stock appreciated at an annualized rate of 5.13%, from $47.03 to $60.41. This underperformed the 10.20% compounded return of the S&P 500 index over the same period.

Direct Purchase and Dividend Reinvestment Plans

Walmart has both direct purchase and dividend reinvestment plans.  In general, the fees for Walmart’s plans are higher than for other Dividend Aristocrats.  When you open up a direct purchase and dividend reinvestment plan, you’ll pay a $20 setup fee.  For each cash purchase by check, you’ll pay a fee of $5 plus 5 cents per share purchased.  If you pay by direct debit, the fees are $1 plus 5 cents per share.  The minimum initial investment is $250, either in a single purchase or through 10 monthly direct debits of $25.  The minimum for additional investments is $50 for a single purchase or $25 by automatic continuing debit.

None of the fees apply when reinvesting dividends – Walmart pays all the fees for the dividend reinvestment plan.

When you sell your shares through the plan, you’ll pay a fee of $25.50 plus 5 cents per share sold.

Helpful Links

Walmart’s Investor Relations Website

Current quote and financial summary for Walmart (finviz.com)

Information on the direct purchase and dividend reinvestment plans for WMT

 

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