Saturday, 23 February 2013

A Look at Wal-Mart Stores


You’ve probably already noticed that Wal-Mart Stores increased its dividend by 18% on Thursday. Not too shabby!

So let’s have a look at the numbers…

Average Dividend Yield Analysis*

WMT-N
Year
High Price
Low Price
1Q Div.
2Q Div.
3Q Div.
4Q Div.
Annual Dividend
High Yield
Low Yield
2001
$58.75
$42.00
$0.06
$0.07
$0.07
$0.07
$0.27
0.64%
0.46%
2002
$63.94
$43.72
$0.07
$0.075
$0.075
$0.075
$0.30
0.67%
0.46%
2003
$60.20
$46.25
$0.075
$0.09
$0.09
$0.09
$0.35
0.75%
0.57%
2004
$61.31
$51.08
$0.09
$0.1300
$0.1300
$0.1300
$0.48
0.94%
0.78%
2005
$54.60
$42.31
$0.1300
$0.1500
$0.1500
$0.1500
$0.58
1.37%
1.06%
2006
$52.15
$42.31
$0.1500
$0.1675
$0.1675
$0.1675
$0.65
1.54%
1.25%
2007
$51.44
$42.09
$0.1675
$0.2200
$0.2200
$0.2200
$0.83
1.97%
1.61%
2008
$63.85
$43.11
$0.2200
$0.2375
$0.2375
$0.2375
$0.93
2.16%
1.46%
2009
$57.51
$46.25
$0.2375
$0.2725
$0.2725
$0.2725
$1.06
2.28%
1.83%
2010
$56.27
$47.77
$0.2725
$0.3025
$0.3025
$0.3025
$1.18
2.47%
2.10%
2011
$60.00
$48.31
$0.3025
$0.3650
$0.3650
$0.3650
$1.40
2.89%
2.33%
2012
$77.60
$57.18
$0.3650
$0.3975
$0.3975
$0.3975
$1.56
2.72%
2.01%
2013


$0.3975
$0.47
$0.47
$0.47
$1.81


2014


$0.47
$0.47
$0.47
$0.47
$1.88


Stock Prices and dividends are per calendar year.
12y ave
1.70%
1.33%
Dividends are recorded in the quarter they were paid.
5y ave
2.51%
1.95%







3y ave
2.70%
2.14%







5y
$75.01
$92.90







3y
$69.74
$84.29






Super Cheap
$64.99



The table shows the 3 year average dividend yield to be 2.70% ((2.47% + 2.89% + 2.72%)/3). I use the numbers in the “High Yield” column for obvious reasons.

Using the current annual dividend of $1.88, one would have to pay $69.74 for a 2.70% dividend yield.

Buying the stock at its low in 2011 would have earned you an initial yield of 2.89%. Using the current annual dividend, that corresponds to a stock price of $64.99 today (see “super cheap” price in the table above).

Graham Price

WMT’s 2010, 2011 and 2012 EPS were $3.72, $4.18 and $4.54. 3Y Ave EPS = $4.15.
WMT’s BV is $22.00.
Graham Price = SQRT (3Y Ave EPS * BV * 22.5) = $45.31

Cyclically Adjusted Price to Earnings Ratio

WMT’s 10Y Ave EPS = $3.08
CAPE = Stock Price / 10Y Ave EPS = $70.40 / $3.08 = 22.9
A CAPE below 20 is good.

Conclusion

WMT increased EPS from $1.50 in 2002 to $4.54 in 2012. That’s an increase of 3.02 times over 10 years. In 2012, Buffet bought 793,000 shares of WMT at an average price of $57.

I would consider adding WMT to my portfolio if the share price came down a few dollars – say $66-$68.


*My method is not perfect as the stocks low price may have occurred before the annual dividend increase.


2 comments:

  1. I was able to grab some shares back when the Mexico bribery scandal first broke. Got in around $58, too bad I didn't have enough cash to get a larger position though. I'd love for it to pull back to the mid $60's and grab some more. Their latest dividend increase was incredible. I wasn't expecting anywhere near an 18% raise.

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    1. That's a sweet sweet price. Mid 60's would definitely be a buy. I've been looking very hard to put some of my cash to use, but the market is just too high these days. Looks like some think all our economic woes are behind us.

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