Wal-Mart is the largest retailer in the world with more than $400 billion in annual revenue and fast approaching 10,000 stores across the globe. The company mainly operates supercenters in addition to wholesale warehouse clubs.
WMT’s current 10 year dividend growth rate is 17.14%!
Any investor, who’s main goal is to preserve capital, should seek, in all his or her investments, a significant difference between the current value of a business and the price in which the business can be bought. This insures protection in case of an unfavorable event and to maximize the investment return if the analysis is confirmed.
In the words of his disciple, Warren Buffett: “Never depend on a good sale. Get a purchase price so attractive that even a mediocre sale will produce good results.
Although given the title of “Dividend King” we must be vigilant in maintaining price discipline. We typically purchase operating companies at 8-10 times Cash Flow. However, a stock like this warrants special attention due to its size and dominance of their market. Chances are no other company will be able to purchase this behemoth of a company, therefore we will put a value on the business of 30 times Cash Flow. The goal is to purchase operating companies for at least half their value, with that said we will purchase this company up to 15 times Cash Flow.
Conclusion & Valuation
WMT has consistent rising dividends, strong cash flow, and steady low debt!
I am buying up to $61.95 and not a penny more!