Yahoo Finance Walmart (NYSE:WMT) Is Increasing Its Dividend To $0.56
Walmart Inc.'s (NYSE:WMT) dividend will be increasing from last year's payment of the same period to $0.56 on 6th of September. The payment will take the dividend yield to 1.8%, which is in line with the average for the industry.
See our latest analysis for Walmart
Walmart's Payment Has Solid Earnings Coverage
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Based on the last dividend, Walmart is earning enough to cover the payment, but then it makes up 196% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.
Looking forward, earnings per share is forecast to rise by 57.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 31%, which is in the range that makes us comfortable with the sustainability of the dividend.
Walmart Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was $1.59, compared to the most recent full-year payment of $2.24. This implies that the company grew its distributions at a yearly rate of about 3.5% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
Dividend Growth May Be Hard To Achieve
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately, Walmart's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. Growth of 1.4% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.
In Summary
Overall, we always like to see the dividend being raised, but we don't think Walmart will make a great income stock. While Walmart is earning enough to cover the payments, the cash flows are lacking. We don't think Walmart is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 4 warning signs for Walmart that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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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