Walmart is one of the largest companies in the world and the largest company in the retail sector. It has a huge global presence with operations spanning across 27 countries. Given its scale and dominance in the retail industry, investing in walmart share price can provide several benefits. Let’s take a look at the top 5 benefits:
Stable Dividend Income
Walmart is known for its consistent dividend payments. It has increased its annual dividend for the last 47 years in a row, making it a dividend aristocrat. The current dividend yield stands at around 1.5%, which is higher than what many savings accounts offer. Investing in Walmart shares can provide a steady stream of passive income from dividends. The dividend payments tend to increase each year, boosting the overall returns.
Defensive Nature
As the largest retailer globally, Walmart has massive scale and resources which help it to withstand economic downturns better than many other companies. People may cut down on discretionary spending during tough times, but they will continue to buy daily necessities. This makes the retail sector and Walmart relatively defensive. So Walmart shares can offer downside protection for investors compared to more aggressive growth stocks.
Consistent Financial Performance
Walmart has been able to consistently deliver robust financial performance quarter after quarter for many years now. This is a result of its massive economies of scale across its global operations as the largest retailer in the world. With unparalleled supply chain and logistics infrastructure, Walmart is able to offer the lowest prices to customers while still maintaining healthy profit margins. It has successfully grown its top and bottom lines even during periods of economic slowdowns. This consistent growth in revenues, profits and cash flows enables Walmart to regularly pay dividends and conduct large share buyback programs. The predictable and steady nature of its financial performance provides a great deal of assurance to long-term investors about the downside risks.
Appealing Valuations
Walmart is a retail behemoth with massive scale of operations across the globe. However, as is the case with most mature and established businesses, Walmart shares do not offer very high growth prospects. This is why the stock usually trades at reasonable valuations based on its earnings and cash flows. Periodically, when short-term concerns emerge around increasing online competition, the stock tends to look undervalued compared to its fundamentals. For long-term investors, such phases present a good opportunity to buy into one of the strongest retail brands in the world at a discount. The size and consistent performance of Walmart’s business make such valuations quite appealing for those with a buy-and-hold mindset.
Hedge Against Inflation
As inflation rises, companies are able to pass on some of the increased costs to customers by raising prices. However, Walmart has the scale to negotiate better prices from suppliers. It is also able to keep prices low through its efficient supply chain. This helps Walmart to maintain margins even during inflationary periods. Thus, Walmart shares can act as an inflation hedge for investors.
Conclusion
Investing via 5paisa in the shares of retail behemoth Walmart or coca cola share price provides benefits like steady dividend income, defensive nature, consistent financials, attractive valuations and inflation hedging. Given its dominance in the retail space, Walmart continues to be a good long term investment option for stability and growth in one’s portfolio.