05-20-2015, 11:33 PM
(05-20-2015, 09:55 PM)stewardinlife Wrote: Eric, Could you shed some light on your WMT pullout. Just curious, when you say WMT has declining growth rate, are you meaning the stock in general? Is WMT out of your dividend growth rate criteria? What is the typical growth rate you have established personally to be in your portfolio?
Here is an article I wrote about WMT shortly before I sold it at the beginning of the year. In short, the payout ratio has gotten to a point where it appears management isn't willing to go much higher on, so the last two dividend increases have been around 2% with increases from $0.47 to $0.48 last year, and from $0.48 to $0.49 with the most recent one.
Since that article, analyst earnings estimates have continued to trend lower and are now projected at $4.84 for this year. As a result, I don't see much of a dividend increase happening again next year and I think we will continue to see the $0.04 per year raises until the payout ratio gets back to near the 30% level again.
So in the end, with a relatively low dividend yield of around 2.5%, and my expectations for low to mid single digits earnings growth and dividend growth in the 2% range for the next few years I just think there are much better opportunities out there.
To your last question, I'm generally looking for double digit dividend growth with stocks yielding under 2%, 8-10% dividend growth for the 3% yielders, and 4-8% for the 4%+ yielders.