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A Look at Walmart’s Dividend Curve

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Revenue and EPS of Walmart

Walmart Stores (WMT) posted a 1% revenue increase in 2017 after a 1% decline in 2016 and 2% growth in 2015. Growth for 2015 was driven by Walmart US, while Sam’s Club and Walmart International saw flat growth. The decline in 2016 was due to the decline posted by Walmart International and Sam’s Club offset by Walmart US. The 2017 growth was also driven by Walmart US, while Sam’s Club was offset by Walmart International. The company posted 2% revenue growth in 1H18, which was driven by Walmart US and Sam’s Club, offset by Walmart International. 

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Walmart posted EPS growth rates of -4% and -8% in 2017 and 2016, respectively. The company saw 3% EPS growth in 2015. Higher operating costs and interest expenses affected EPS numbers offset by share buybacks. EPS has fallen 10% in 1H18. Higher operating costs, interest expenses, and a debt extinguishment loss affected EPS numbers offset by share buybacks. The company has maintained a very good annual free cash flow balance.

Dividend trajectory of Walmart

We can see Walmart’s downward sloping dividend yield curve. This trend is due to the rising prices of the company, which has offset the effect of the increase in dividend per share. Walmart has a dividend yield of 2.6% and YTD (year-to-date) price gains of 14.4%. These figures compare to a dividend yield of 2.3% and YTD price gains of 14.7% from the Dow Jones Industrial Average (DJIA-INDEX) (DIA). The S&P 500 (SPX-INDEX) (SPY) has a dividend yield of 2.4% and YTD price gains of 13.3%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has a YTD price gain of 21.4%.

The PowerShares Dividend Achievers (PFM) is a dividend ETF with exposure to Walmart. The ETF has a dividend yield of 2.1% and a PE of 20.1x. The WisdomTree US High Dividend Fund (DHS) is a dividend ETF with exposure to Walmart. It has a dividend yield of 3.1% and a PE of 21x.

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