- Walmart (WMT) stock offers a rock-solid investment to help combat inflation.
- Plus, you can collect dividends and compound your returns simply by holding the stock for the long haul.
- Investors should start collecting Walmart shares while the price is low.
Walmart (NYSE:WMT) is a bricks-and-mortar retail giant that also has a robust online presence. Without a doubt, WMT stock should be priced at $300 or more within a decade.
Of course, there are no guarantees in a time when inflation is wreaking havoc on consumers’ confidence. On the other hand, InvestorPlace contributor Faizan Farooque specifically identified Walmart shares as inflation-proof and good to buy while the Federal Reserve raises interest rates.
There’s no need to miss out on the potential gains that can come from simply holding shares of Walmart. It’s one of the simplest investment you can make, in a company that has stood the test of time.
| WMT | Walmart | $151.01 |
Is WMT Stock a Dividend Stock?
Yes, WMT stock is definitely a dividend stock. Walmart has a terrific track record as a dividend payer.
The company’s annualized dividend payment has increased from $1.59 to $2.24 since 2012, implying a yearly distribution increase of 3.5%.
Currently, Walmart offers a forward annualized dividend yield of 1.49%. Now that might not sound like much of a wealth builder, but let’s consider the implications for long-term investors.
While inflation is eating away at the value of your cash, WMT stock is actually paying you to hold on to it. A common strategy is to reinvest your quarterly dividend payments back into the shares, thereby leveraging the magic of compounding returns.
You can check with your broker to see if it will automatically reinvest the dividends on your behalf. This way, you won’t forget to funnel the distributions back into your Walmart position every three months.
Some people will even take it a step further, and sell covered call options if they own 100 WMT stock shares or more. This is almost like getting a “second dividend” simply from holding your shares.
Be sure to learn more about options before trading them, though, since they are complex financial instruments.
Where Will WMT Stock Be In 10 Years?
There’s no crystal ball to predict exactly where WMT stock will be in 10 years, but logically it should double from the current price. This would imply a per-share price of roughly $300 or more.
As Farooque pointed out, Walmart generated $152.9 billion in revenue and $5.9 billion in consolidated operating income during 2021’s fourth quarter. Inflation was already becoming a major concern at that time, yet clearly, Walmart was able to rake in serious revenue and income.
Will Walmart’s growth trajectory continue? For fiscal 2023, Walmart expects both its consolidated net sales to increase by around 3% in constant currency. Furthermore, the company anticipates its consolidated operating income to grow by around 3%, as well.
In other words, the answer is definitely yes, Walmart will continue to make money. And when a businesses is consistently revenue-positive and profitable, this should be reflected in higher share prices over time.
The key phrase here is “over time.” It’s much easier to predict a share-price doubling in a decade, than a specific WMT stock price next week or next month.
Just consider that Walmart shares traded for roughly $75 a decade ago. Impressively, the stock doubled to around $150 in ten years. This happened despite a major calamity occurring during that time, as Covid-19 created huge problems for retailers.
So, even if other problems occur, there’s no reason why Walmart’s investors shouldn’t be able to double their money by holding the stock, even before dividends are factored into the equation.
What You Can Do Now
Investors can just keep it simple and start accumulating shares of WMT stock slowly. The share price is still under $200, and should be affordable for many brokerage accounts.
Plus, you can goose your returns somewhat by selling covered call options. If you fully understand options, then you can sell one covered call for every 100 Walmart shares you own.
That will act like a “second dividend,” in addition to the already rock-solid payouts that Walmart will distribute to your account every quarter.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
