Walmart's (NYSE:WMT) Dividend Will Be $0.235

Walmart Inc.'s (NYSE:WMT) investors are due to receive a payment of $0.235 per share on 5th of January. This takes the annual payment to 0.9% of the current stock price, which unfortunately is below what the industry is paying.

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Walmart's Future Dividend Projections Appear Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, Walmart's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 28.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 28% by next year, which is in a pretty sustainable range.

View our latest analysis for Walmart

Walmart Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.653 in 2015 to the most recent total annual payment of $0.94. This implies that the company grew its distributions at a yearly rate of about 3.7% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 4.9% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, Walmart could always pay out a higher proportion of earnings to increase shareholder returns.

Walmart Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Walmart is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Walmart that you should be aware of before investing. Is Walmart not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.