Wal-Mart Stores (NYSE:WMT) released quarterly earnings on Thursday morning, and investors weren't too impressed. The retailing giant met analyst expectations on earnings, but revenue fell short of estimates. Much of the financial media coverage following the earnings report involved the megaretailer's announcement that it would raise pay for about 500,000 hourly workers. While this made for a nice public relations bump, Wal-Mart's underlying results left a lot to be desired. The stock closed the day down about 3% from the previous close.

Once again, Wal-Mart grew comparable sales and earnings by only small amounts. This resulted in another tiny dividend increase of 2%. Wal-Mart's forward-looking outlook also calls for earnings to decline in the current fiscal year.

Wal-Mart's quarter, by numbers
Fourth-quarter earnings clocked in at $1.61 per share, which met forecasts, but represented growth of less than 1%, year over year. Total revenue grew 1% to $131 billion, and U.S. comparable-store sales, which measure sales at locations open at least one year, grew a more satisfactory 1.5%.

Wal-Mart's small-store concept saw the greatest growth, again. The Neighborhood Market format grew same-store sales by an impressive 7%.

Neighborhood Market, California. Source: Company website.

Sam's Club also did well, posting a 2% comps increase excluding fuel. Wal-Mart's e-commerce platform is performing well, with global e-commerce sales growing 22% last year.

The biggest factor working against Wal-Mart right now is its international operations. Sales fell 3% last quarter, though most of this decline was due to currency. The strengthening U.S. dollar is taking a bite out of revenue for all U.S. companies that do business abroad. Indeed, unfavorable currency fluctuations shaved $5.3 billion off of Wal-Mart's revenue in fiscal 2015.

For the full year, Wal-Mart's earned $5.07 per share, up 3% year over year. The company added 511 new stores across the globe last year. Going forward, management expects fiscal 2016 earnings to fall within a range of $4.70 to $5.05 per share. At the midpoint, this would represent a 3% decline in earnings per share from fiscal 2015.

In wage news, Wal-Mart announced that roughly 500,000 full-time and part-time associates will receive pay raises. The initiative "ensures that Walmart hourly associates earn at least $1.75 above today's federal minimum wage, or $9.00 per hour, in April. The following year, by Feb. 1, 2016, current associates will earn at least $10.00 per hour," said the company.

WalMart keeps its dividend streak alive (barely)
Separately, Wal-Mart announced a dividend increase. Income investors hold Wal-Mart in high regard, and for good reason. The company has now come through with dividend increases for 42 consecutive years. This is an impressive streak, but Wal-Mart's dividend growth rate has slowed tremendously in recent years.

Wal-Mart will increase its annual dividend to $1.96 per share, which is just 2% above last year's dividend. That annual payout results in a 2.3% yield at yesterday's closing price. From 2009-2013, Wal-Mart in total increased its annual dividend from $1.09 per share to $1.88 per share. This amounted to 11% dividend growth over that five-year period, compounded annually. However, Wal-Mart's dividend growth has since ground to a halt. The company has each quarter delivered a one-penny-per-share increase to the quarterly dividend for the last two years.

Of course, a company can only maintain high dividend growth if underlying growth supports stronger increases. On the surface, Wal-Mart has more than enough room to boost its dividend at higher rates. The company generated $16.3 billion of free cash flow last year, and distributed just $6.1 billion in dividend payments. Wal-Mart's free cash flow payout ratio was a comfortable 37%, so it's odd to see such tiny dividend increases. Perhaps management is being conservative because earnings are expected to decline next year, but regardless of the reasoning, dividend growth investors are likely to be disappointed with Wal-Mart.

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