Walmart Stores Inc. (WMT, Financial), one of the finest dividend growth stories in the history of retail, continues to aggressively raise its payout every year. That commitment to increasing shareholder returns, coupled with a stagnant share price, has improved the stock’s yield nearly tenfold since the beginning of this young century.
Priced for growth, shares of WMT closed out 1999 with a paltry 0.29% dividend yield. Since then, the company has issued 12 dividend hikes — pushing its payout higher by a total of 630% — including a 21% increase in March, which registered as the largest raise given to shareholders in four years. This has resulted in, you guessed it, a steadily rising dividend yield:
As you can see from the chart above, investors have been able to lock in a record yield from shares of WMT at pretty much any point during the last 11-plus years, and right now is no different: The stock has paid at least 2.60% every day since the company’s March dividend hike, a level it had never reached before. But how did we get to this point? Blame it on a listless share price.
The stock closed out 1999 trading at $69.12, and it hasn’t traded that high since. As of Wednesday’s close, the stock was sitting at just $52.32, more than 24% lower than its turn-of-the-century peak. In other words, the company’s dividend has rapidly outpaced its share price, pushing its yield higher and higher over time.
To illustrate this point, below I’ve put together a chart featuring Wal-Mart’s share price since the start of 2000 (black), along with the threshold it must dip below to push its yield over 3.00% (blue). That’s something it’s never done — but may do very soon.
Despite the company’s best efforts to increase shareholder returns through fatter dividend payments, Walmart’s stock just hasn’t become more attractive to investors over the last 11+ years.
The company currently maintains a forward payout ratio slightly under 30%, so its 36-year dividend growth streak isn’t ending any time soon. The annual dividend hikes will continue whether the stock budges or not. If it continues to drag, it won’t be long before Walmart’s shares are available with a 3% yield for the first time in history.
Priced for growth, shares of WMT closed out 1999 with a paltry 0.29% dividend yield. Since then, the company has issued 12 dividend hikes — pushing its payout higher by a total of 630% — including a 21% increase in March, which registered as the largest raise given to shareholders in four years. This has resulted in, you guessed it, a steadily rising dividend yield:
As you can see from the chart above, investors have been able to lock in a record yield from shares of WMT at pretty much any point during the last 11-plus years, and right now is no different: The stock has paid at least 2.60% every day since the company’s March dividend hike, a level it had never reached before. But how did we get to this point? Blame it on a listless share price.
The stock closed out 1999 trading at $69.12, and it hasn’t traded that high since. As of Wednesday’s close, the stock was sitting at just $52.32, more than 24% lower than its turn-of-the-century peak. In other words, the company’s dividend has rapidly outpaced its share price, pushing its yield higher and higher over time.
To illustrate this point, below I’ve put together a chart featuring Wal-Mart’s share price since the start of 2000 (black), along with the threshold it must dip below to push its yield over 3.00% (blue). That’s something it’s never done — but may do very soon.
Despite the company’s best efforts to increase shareholder returns through fatter dividend payments, Walmart’s stock just hasn’t become more attractive to investors over the last 11+ years.
The company currently maintains a forward payout ratio slightly under 30%, so its 36-year dividend growth streak isn’t ending any time soon. The annual dividend hikes will continue whether the stock budges or not. If it continues to drag, it won’t be long before Walmart’s shares are available with a 3% yield for the first time in history.
