Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



How Dividends Change the Game for Wal-Mart Investors

The wealth-building power of compound interest will never cease to amaze me. It's a story of patience and attention to detail, where small differences in the short term add up to massive divergence over decades. In the end, the biggest winners don't always deliver the fattest share-price returns.

Let's take a closer look at retail giant Wal-Mart (NYSE: WMT  ) . Sam Walton's empire pumped an outrageous $464 billion of revenue through its machinery last year thanks to the customer-attracting power of low prices. A world-class supply chain keeps margins low but positive, and the company produced $14 billion of free cash in 2012. Of that massive haul, $5 billion was pumped into dividend payments, and another $6.3 billion was spent on net share buybacks.

A decade earlier, Wal-Mart spent just $2.5 billion on dividends and buybacks combined.

What it all boils down to is one of the strongest dividend-boosting policies anywhere. Rising payouts have helped Wal-Mart investors keep pace with the Dow Jones Industrial Average (DJINDICES: ^DJI  ) over the last decade and pull way ahead since 2008.

WMT Chart

WMT data by YCharts.

Just how generous are Wal-Mart's dividend raises compared to other income-friendly Dow stocks? This next chart might shock you:

WMT Dividend Chart

WMT Dividend data by YCharts.

Procter & Gamble and Johnson & Johnson are two of the steadiest cash machines in the consumer-facing world, and they're not shy about sharing their wealth with investors. Coca-Cola is often held up as an example of how to run a dividend program. No doubt all three of these Dow stocks can help you build a rock-solid retirement portfolio with plenty of income-generating power. All three currently sport stronger yields than Wal-Mart.

But the Waltons are doing their level best to change the standing in that yield race. If current payout-boosting trends continue for a few more years -- and I don't see why they wouldn't -- it won't be long before Wal-Mart's yield jumps past all of these worthy rivals.

If you're interested in some of these dividends on your quest for high-yielding stocks, The Motley Fool has compiled a special free report outlining our nine top dependable dividend-paying stocks. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here to discover the winners we've picked.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2259061, ~/Articles/ArticleHandler.aspx, 9/26/2016 11:51:27 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,114.69 -146.76 -0.80%
S&P 500 2,150.65 -14.04 -0.65%
NASD 5,263.34 -42.41 -0.80%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 11:36 AM
^DJI $18115.54 Down -145.91 -0.80%
WMT $71.81 Down -0.54 -0.75%
Wal-Mart Stores CAPS Rating: ***