There is no denying that Wal-Mart Stores, Inc. (NYSE:WMT) stock is not as hot as the big names in the Internet industry. However, the company is making some strategic bets that could turn out to be fruitful. Investors looking for growth who also want some regular dividends might want to add Walmart stock to their watch list.
Sure, Walmart is no Amazon.com, Inc. That doesn’t mean the traditional retail giant can’t benefit from growth in the e-commerce industry, though.
In its last fiscal quarter, both Walmart’s global e-commerce sales and its gross merchandise volume (GMV) increased eight percent year-over-year. In Walmart’s most recent fiscal year, e-commerce sales grew 12%, while GMV grew 13%. (Source: “Q4 and FY16 Earnings Call Transcript,” Wal-Mart Stores, Inc., February 18, 2016.)
These numbers might not seem that impressive, but the company is just getting started. Walmart recently developed a new e-commerce platform to scale across its business, built new fulfillment centers, and even started offering online grocery shopping in more than 20 markets in the U.S.
With continued investments in the segment, e-commerce could be the next growth-driver for Walmart.
Investments in People
Not everyone is a fan of the company’s decision to invest in its employees. Giving raises to a giant workforce is quite expensive, but it just might change the company’s image in the eyes of both employees and customers.
You see, a better working environment reduces employee turnover, which could eventually create savings in Walmart’s expenses. Moreover, the company is also investing in employee training programs, which could improve customer service.
The retail industry is competitive. If a company is lacking in customer service, shoppers will just go elsewhere. And let’s be honest, Walmart isn’t exactly known for being the best at customer service. So investments that help generate higher customer satisfaction rates should be welcomed.
When it comes to returning value to shareholders, few companies can match Walmart. Since declaring its first dividend in March 1974, the company has been increasing its annual cash dividend for 42 years. (Source: “Dividend History,” Wal-Mart Stores, Inc., last accessed March 3, 2016.)
This year, Walmart stock is paying a quarterly dividend of $0.50 a share. In fiscal year 2016, the company returned $10.4 billion to shareholders through dividends and share buybacks. (Source: “Q4 and FY16 Press Release,” Wal-Mart Stores, Inc., February 18, 2016.)
With an impressive dividend yield of 3.05% and a solid track record in dividend growth, WMT stock could be a great choice for income investors.
The Bottom Line on Walmart Stock
There you have it: while Walmart is probably not going to make the next big thing, it is running a solid business and has decent growth potential. Add in the growing dividends and WMT stock is definitely worth a closer look.