In the six decades since its inception, Walmart has managed to change the face of retail, paving the way in innovation by servicing its customers through its expanding family of brands and by leveraging new technology. From the one sole store, the company has transformed itself into a global retail titan, becoming one of the largest private-sector employers across the world.
Unabated by its debt load and rising to the occasion despite the current COVID-19 pandemic, Walmart has managed to mark remarkable revenue in 2020 at $524 billion. With a long history of strong dividend payments, consistent profitability and a ubiquitous presence across the US, the company has built a reputation for being one of those companies that can compound your wealth year after year, helping you build a fortune.
A brief history of Walmart
For anyone who has travelled to the States, Canada, Central or South America and sought a discount retailer that sells anything and everything ranging from groceries, consumables and health and wellness products to electronics, books and stationery, clothing and home furnishings amongst other things, Walmart needs little introduction. What has today become one of the most celebrated and profitable international retail corporations in history, operating a chain of hypermarkets, discount department stores and grocery stores, the company traces its roots back in 1962 when its founder Sam Walton opened his first discount retailer in Bentonville, Arkansas.
Marking a decade of firsts, during the 1980s the company rolled out the first Walmart superstores named Sam’s Club, serving small businesses and individuals, as well as its first Walmart Supercentres that combined a supermarket with general merchandise. By 1990, Walmart had become the top retailer in the US with revenues in product sales over $26 billion, surpassing its competitors, while it began to branch out internationally with stores in Mexico, the UK, Germany, China and Canada.
Walmart doubled its sales in 1995 and by 1999, it had grown so big that it became the largest private employer across the globe. With the dawn of the new millennium, the discount retailer focused on offering customers a seamless shopping experience both in store and online, so much so that in 2016, it rolled out Walmart Pay, a digital-based payment tool for customers who would like to pay for purchases via their smartphones.
As of July 31, 2020, it operates 11,496 stores and clubs in 27 countries under 56 different names, while it is considered the world’s largest company by revenue with $514.405 billion in 2019 according to the Fortune Global 500 list. E-commerce sales have been surging with a strong performance at Walmart.com, as well as its online groceries, marking a 97% increase.
Not one to rest on its laurels, the company announced in the beginning of 2020 that in its battle for retail supremacy with other industry giants and in order to leverage its brick-and-mortar stores in conjunction with digital shopping, Walmart debuted a membership programme named Walmart+. A rebrand of the company’s existing Delivery Unlimited service, Walmart+ offers free delivery on items at in-store prices, with around 2700 stores able to offer same-day delivery.
More recently, the retail giant has confirmed teaming up with Microsoft in a bid for TikTok. Although still to be formally approved by US regulators, the app is nearing an agreement to sell its US, Canadian, Australian and New Zealand operations in a deal that is expected to be in the $20 to $30 billion range.
Walmart goes public
On October 1, 1970 Walmart went public offering 300,000 shares at $16.50 per share. This means that if you had purchased 100 shares at their original price per share, you would have only paid $1,650. Since its IPO, the discount retailer has split its stock 11 times, with each split being a 2-for-1. As a result, investors received an additional share for each one they owned, doubling the total number of shares.
Wondering how much would your shares be worth today? If we assume that you had purchased 100 shares at its IPO at $16.50 per share, following all stock splits your investment would today be worth over $4.3 million. And if instead you could have afforded to purchase $5000 worth of stock giving you 620,544 shares, following all 11 splits those shares would been worth more than $74 million in October of 2019 when the price per share was at $120.
In addition, the company has hit some noteworthy financial milestones ever since its debut on the New York Stock Exchange. For instance, it has a massive $410.1 billion market capitalisation as of 2019, while its highest-ever 52-week trading high has been that of $151.33 per share. What’s more, its highest-ever stock market closing price took place on September 2, 2020, when it hit $147.68 per share.
A hot stock with great dividends
While the above returns are certainly staggering, the company’s dividend payments are also noteworthy. Walmart is included in the S&P 500 Dividend Aristocrats exclusive group, which measures the performance of S&P 500 companies that have increased their dividends every single year for the last 25 consecutive years. The retailer began paying a cash dividend back in 1974. Since then it has increased it for 46 consecutive years. Providing investors with a generous and steadily rising income stream along the way, Walmart’s dividend payout ratio is roughly 43% which means that it’s paying out 43% of its earning via dividends.
To put this into perspective, a dividend rate of $0.53 per share would pay out just under $329,000 per quarter for 620,544 shares and more than $1.3 million per year should you have made that initial $5000 investment mentioned earlier on.
Holding shares of a company that has consistently issued a rising stream of dividend payments can greatly impact your returns. Going strong, this stock is a worthy candidate for any income investor.
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