Wal-Mart (WMT) shares are up over 3% thanks to better-than-expected 4th quarter results.

Highlights from the quarter are listed below:

  • Constant-currency revenue growth of 3.0%
  • U.S. Comparable store sales growth of 1.8%
  • E-commerce gross margin value growth of 36.1%

In short, Wal-Mart’s e-commerce operations (led by the Jet.com acquisition) are growing rapidly.

Wal-Mart

The company is healthy and is proving that it can continue to grow – despite fierce competition from Amazon and others.

Wal-Mart returned around half of its operating cash flow to shareholders in its fiscal 2017 (the company’s year ends in January); $14.5 billion in total.

This comes to a shareholder yield of 6.8% at current prices.  In addition, the company should be able to grow revenue by ~3%+ a year for total returns of around near 10%.

What makes Wal-Mart special is its uniquely recession resistant business model.

When the economy falters, more consumers tend to shop at Wal-Mart because of its well-deserved reputation for low prices.

Wal-Mart’s recession resistance and economies of scale have helped the company to increase its dividends every year for more than 4 consecutive decades.

I am currently long Wal-Mart.  It’s dividend growth history, solid expected total returns, shareholder friendly management, and reasonable price-to-earnings ratio of 15.1 make the company a long time favorite of The 8 Rules of Dividend Investing.

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Article by Ben Reynolds, Sure Dividend

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