Walmart Dividend Payout Ratio Analysis

There are large and small businesses all across the country, with many different public and private accounting firms that handle their accounts. Many of these businesses are raking in millions and millions of dollars a year. Wal-Mart is one of them. We will be exploring Wal-Mart and how it came about as a business, along with examining their balance sheets, income statement, and the cash flow statement. We will also be taking a look at what Wal-Mart’s current revenues are over the annual reporting periods, and who handles their accounting process.

In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial

The dividend payout ratio provides an idea of how well earnings support the dividend payments. More mature companies tend to have a higher payout ratio. This is well evident with Pepsi Co’s dividend payout ratio of 45.95% as compared to Coca-Cola’s 20.11%. A low dividend payout is always better as it leaves more room for the company to increase dividend payouts in the future while a high ratio means there is less room.

Today I will be trying to convince you to invest in the Wal-Mart Stores, Inc. What makes this stock great you may ask is that it has more than 5,000 stores and clubs nationwide. The stock cost $71.67 per share and the stock has gone up $1.59. Walmart first opened common stock to the public in 1970 and began trading on NYSE on August 25,1972. Walmart has emphasized the importance of keeping its merchandise in stock for shoppers. The company’s stock have risen about 15% this year. Wal-Mart is the world's largest retailer. The employees are more evident as Wal-Mart becomes a more pleasant place to shop. Walmart has said it will invest billions in lowering

Wal-Mart Corp has had very inconsistent asset-to-equity ratio form year to year which makes it difficult to draw any conclusion regarding investment. Such inconsistency could be an indication of

In 2011, Walmart's debt to equity ratio was that of 72.75 while the industry average was 55 and it exceeded the range of comparability by a significant amount(Stock-analysis)(Appendix B). The debt to equity ratio indicates how much debt a company has for every dollar of shareholders' equity. Walmart's value of 72.75 is high especially when considering the trend for the past three years. One reason for Walmart's high debt to equity ratio could be that they have been aggressive in financing their growth with

2010 Annual Report – Walmartstores.com (2010). Retrieved on January 10, 2011 from http://cdn.walmartstores.com/sites/AnnualReport/2010/PDF/WMT_2010AR_FINAL.pdf Best Buy (2010). Company Reference – Best Buy. Retrieved January 11, 2011 from http://www.answers.com/topic/best-buy-co-inc Dell. (2010). Wall Street Journal: MarketWatch. Retrieved January 12, 2011, from http://www.marketwatch.com/investing/Stock/DELL/financials/balance-sheet Hoyt

The purpose of this report is to evaluate the stock price of Wal-Mart Stores Inc. (which ticker symbol in NYSE is WMT) by fundamental analysis. According to this analysis, I recommend that Wal-Mart is worth to invest in the long term because of the potential growth of market shares and revenue. Besides, based on P/E method and Gordon model, WMT price is undervalued; therefore, if investors buy the stock, they will get benefit not only in capital gain but also in dividend cash inflow.

Wal-Mart has an increase on per share of common stock, between 2005-2007. Based on the annual report of Wal-Mart for 2007, the company generally has a working capital deficit due to the

Some applications of dividend discount modeling can be more complex. One method divides the future growth in dividends into three periods, all of which have different growth rates. This is useful when a company’s profits are expected to grow rapidly and then gradually decline to an industry average. The complexities of this model are outside of the scope of this report, and the model can easily be run using tools found online. The assumptions of this calculation as follows. Walmart is no longer in a growth phase, so this calculation assumes that it is at the transitional phase. Because of this, 2007 data is used to initialize the calculation (EPS, dividend, etc.,) and the ‘growth’ period was 3 years. Initial growth of EPS still assumed to be 10.4%. 14 transitional years, as required by the model (total of 17 years for growth and transition is required). All of these assumptions result in a 3 stage DDM

Through the mid-part of the 80’s and into the early 90’s Wal-Mart had still produced annual earnings growth over 20%. It wasn’t until the early part of the century where Wal-Mart had produced earnings growth in the low teens to single digits. With that as supporting material, Wal-Mart has already experienced it’s growth and transition phases of its business cycle and is more in their maturity stage of their business. As of 2010, Wal-Mart is the largest retailer in the world with more than $400 billion in annual revenues across more than 8,000 stores. It would be. It would not be justifiable to utilize the three-stage dividend approach in valuing such a mature company.

The following is the history of dividends declared and paid by Wal-Mart from 2008 to 2012.

In 1962, Wal-Mart was built sometime by Sam Walton in Roger, Arkansas. Wal-Mart has 5,100 stores and clubs all over the United States and a sum of 8,300 unit's global. The company was able to employ something like over 2 million associates from all over the world and about 2.4 million in the United States. Wal-Marts average annual total income rate was somewhat in excess of 10% for the three years from the fiscal year that is ending 2009 to the fiscal year ending 2011 (Blanchard, 2008). Research shows that they also had what was known as a stock split of 100 %; Wal-Mart was able to see this split 12 times all through the eras of 1973 through 2002. They have received many awards and were categorized 5th in Fortune magazine's "Global Most Well-regarded All-Stars" as the third most appreciated corporation in America (Wal-Mart, 2013)

To test the assumption of a discount rate of 7% as given in the outline of the case, we calculated the required rate of return for the Wal-Mart stock using CAPM . Using rWalMart = Rf + βWalMart [E(RM) – RF], we find the required rate of return to be 7.01% and in line with the information given in the case outline.

Wal-Mart is a company which operates in the service sector, more specifically in the “Discount, Variety Stores/Retail” industry. The company’s superior performance is demonstrated through the fact that it was America’s largest company (in terms of revenue) in 2002, and the reputation of the company is reflected in the opinion of “Fortune” who have identified Wal-Mart as one of the world’s most admired companies. In 2004 Wal-Mart had been hiring 1.4 million employees – making it the largest corporation in the world. Wal-Mart’s share prices have also been stable at time of stock market volatility. There are