With the holiday shopping season approaching, so is the peak sales period for retail companies such as Wal-Mart (NYSE: WMT).
The largest retailer in the world, Wal-Mart has been a very pleasant gift to long term investors.
The fact that legendary investor Warren Buffett is a major shareholder Wal-Mart manifests its appeal. It has many features that make it it attractive to growth investors, value investors, and income investors. This is shown by its bullish price trajectory.
As the chart below shows, Wal-Mart is up for the last week, month, quarter, six months, and year of market action.
There are many reasons to expect that to continue. As the bull market ages, Wal-Mart will become even more appealing. Investors will seek the security of sound, stable companies such as Wal-Mart. That is why it is up more than 11 percent for the quarter!
Even with its massive size, market capitalization of nearly $270 billion, Wal-Mart is still growing its earnings. Sales continue to increase, too. There will never be massive growth from Wal-Mart. It is simply too big. But it is steady, secure growth that is very appealing to the investment community.
Wal-Mart provides this growth with a healthy balance sheet and robust income statement.
This allows for Wal-Mart to reward income investors with an above average dividend yield of just over 2.3 percent. The average for a member of the Standard & Poor’s 500 (NYSE: SPY) is around 2 percent. In addition, Wal-Mart is a “Dividend Aristocrat.’ To earn that title, a company must have increased the amount of its dividend annually for at least the past 25 years. For the long term shareholder of Wal-Mart a raise is granted each year.
Those owning the stock are rewarded simply for not selling!
The steady growth should continue to increase the returns for the shareholders of Wal-Mart. It has a return-on-equity of more than 20 percent. That is one of the most important indicators for Warren Buffett. All long term investors should enjoy the rising dividend yield that creates a solid total return for Wal-Mart.