About Walmart
Walmart began growing its dividend in 1975 and has continued to do so, in part, by expanding internationally.
Photo courtesy Daniel Ng/flickr.com.
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.
As you might expect, the numbers involved with Walmart are massive. In fiscal year 2013, Walmart recorded net income of $27.8 billion, up 4.7% from 2012. Fiscal year 2013 sales were $466 billion, up 5.0% from 2012.
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 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 2014, the company announced a dividend increase of 2.1%, from $1.88 to $1.92 per share. This was the smallest increase in the history of Walmart, which has usually increased its stock dividend by at least 10% and usually more. (Walmart’s next smallest dividend increase was 7.1% in 2002.)
Walmart’s dividend growth has slowed recently, but the company still has an impressive long term record.
As noted above, Walmart has usually increased its dividend payout by more than 10% and by much more in the early years of the company, when it was expanding quickly. The company has a 5-year Compounded Annual Dividend Growth Rate (CADGR) of 11.78%. Longer term CADGRs are even better, with 10-year and 20-year dividend growth rates of 13.95% and 16.87%, respectively. Finally, Walmart’s 25-year CADGR (from 1989 – 2014, which was a period of rapid growth for the company) is 18.51%.
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-year period from July 2009 to July 2014, Walmart stock appreciated at an annualized rate of 12.4%, from about $42 to $75 during that time. This was on par with but did not quite match the 14.3% annualized return of the S&P 500 during the same time.
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