Wal-Mart (WMT)
Wal-Mart (WMT) I think that most of us are probably impressed with what Wal-mart (the company) has done here in the U.S. They are obviously a retail juggernaut. And that’s true based only on their traditional stores in the U.S. BTW, think their U.S. growth is done? Think again. In 2008 they opened 191 supercenters. They plan on another 170 in 2009.
Then consider their Super Wal-marts and Sam’s Clubs. Picture your local Wal-mart or Sam’s Club. Can you see the pharmacy–and their ground-breaking $4 prescriptions? Electronics? Auto supplies? Cell phones? Jewelery? Food section? Gas station? How much more? Did you know that Wal-mart is moving into some financial services? They offer money orders, money transfers, check cashing, bill payment, and more. You may have more sophisticated financial needs, but can you doubt that millions of people around the world love these services?
Then consider how far they’ve gone (and have yet to go) on the international scene. International highlights from 2008 include:
Increased sales by over 17%
Opened 3,000th international store
Added over 100 locations–in China alone
Opened their first Walmex bank in Mexico
And with all that in the mix remember–international sales are still less than 25% of total sales.
I remember the first time I heard that Wal-mart was ringing up $1 for every 7 retail dollars spent in the U.S. That’s incredible starting at any time. Considering that Wal-mart has only been around since 1945. Their 2008 annual report blew me away. Net sales increased about $30 billion, to a total net sales of $374 billion. That was an 8.6% increase over 2007.
Finally, let’s look at the backdrop for their growth. I recommend that you look at page 52 of their 2008 annual report. It has a chart that graphs their cumulative 5 year return vs. both the S&P 500 and the S&P 500 Retailing Index. I won’t interpret or ruin the surprise. I will only comment that I think it bodes extremely well for Wal-mart in our current economic environment.
Befor you leave that annual report, please check out the history of dividend increases since 1998 on pages 10 & 11. After you’ve done that, I think you’ll see why I, with my “high dividend” hang-up, still see Wal-mart as a great buy. Sure, their current price of about $48 their dividend is just under 2%, but given their history of dividend growth, this could still be a great investment for the long term, and I don’t believe in anything but the long-term.