I sold out of my WMT position in February after doing research for this article, and I have no regrets nor any interest in buying it at these prices.
Management just came out and told investors that earnings will be dropping in FY2017 and FY2018 before you might see some growth in FY2019.
Meanwhile, the dividend growth seems to be tapped out at about 35% of earnings. With the payout ratio at around 44% for 2015 and close to 50% on 2016 estimates, I don't see any meaningful dividend growth in the next 5 years.
I think WMT is seeing too many headwinds between rising labor costs, a strong dollar, and ever increasing online competition as the retail landscape changes. I don't think it will go the way of KMart or Sears, but do think it will be very difficult for the company to grow much at all due to its mammoth size and the headwinds I mentioned.
If I am going to live with 2% dividend growth, it will be from the likes of Realty Income or AT&T where I am getting paid 5-6% to do it. There are plenty of other stocks yielding 3.3% like Walmart with much better growth prospects.
Management just came out and told investors that earnings will be dropping in FY2017 and FY2018 before you might see some growth in FY2019.
Meanwhile, the dividend growth seems to be tapped out at about 35% of earnings. With the payout ratio at around 44% for 2015 and close to 50% on 2016 estimates, I don't see any meaningful dividend growth in the next 5 years.
I think WMT is seeing too many headwinds between rising labor costs, a strong dollar, and ever increasing online competition as the retail landscape changes. I don't think it will go the way of KMart or Sears, but do think it will be very difficult for the company to grow much at all due to its mammoth size and the headwinds I mentioned.
If I am going to live with 2% dividend growth, it will be from the likes of Realty Income or AT&T where I am getting paid 5-6% to do it. There are plenty of other stocks yielding 3.3% like Walmart with much better growth prospects.