The world’s biggest retailer has always likely been viewed as a dual trade. The dividend yield of 2.6% that Walmart (WMT) currently boasts satisfies value-oriented, income-seeking shareholders. Meanwhile, the fact that the company can simply trounce the competition wherever it sets up shop appeals to growth-oriented investors.
The problem is that Walmart’s huge size has finally caught up with it. Service stinks, the stores aren’t stocked well, and the growth rate lately has relied on heavy spending to enter overseas markets that are already starting to feel a little saturated.
That in itself doesn’t threaten the dividend, but those investors who owned WMT because it was a double-barreled cash cow may find that the cash udder is starting to get squeezed, leaving little room for the kind of growth (including dividend growth) it had enjoyed in the past.