It’s hard to find dividend-paying stocks with attractive growth prospects. This is because the company must have enough Free cash flow (FCF) To support business opportunities and pay profits.
When you find these companies, it’s a good idea to check them periodically to determine what you should do with the shares. Although you can do this throughout the year, January is a good time to do it.
Walmart (NYSE: WMT) and Home Depot (NYSE: HD) They have a long history of raising returns and should continue to provide them Increase capital Opportunities. This makes them ideal candidates for existing investors to buy more shares.
Walmart has become a household name thanks to its ubiquitous namesake and Sam’s Club stores. It currently serves 255 million customers every week. Its focus on keeping costs very low to keep prices low has clearly attracted shoppers.
Although this core philosophy has not changed, management has invested in technology to create a better customer experience, such as ordering online and picking up in stores, including same-day delivery at many locations.
People continue to see Walmart as a place to shop and spend money. Walmart’s core U.S. segment had a 5.3% same-store sales increase in its fiscal third quarter. More than half of the increase is attributable to e-commerce. This covers the period ending 31 October 2024.
Company-wide adjusted operating income during the quarter grew 6.2% when excluding foreign currency translation effects. Management expects at least an 8.5% increase in profitability for the full year.
Walmart first declared its dividend in 1974, and has raised it annually. This makes the company a dividend king. The $6.2 billion FCF through the first nine months of the year comfortably covered the $5 billion dividend.
Of course, the company’s strong business has not gone unnoticed by investors. The stock is up more than 71% over the past year through January 2, handily beating the S&P 500’s 23%. Walmart shares trade at a price-to-earnings (P/E) ratio of 37, versus 30 for the S&P 500.
However, given the company’s performance and future prospects, it seems reasonable for the stock to have a higher valuation.
Founded in the late 1970s, Home Depot has grown to become the largest home improvement retailer by revenue. The company’s annual sales amount to more than $150 billion.
Its results fluctuate with the economy. This is because people buy homes and undertake major construction projects when they feel satisfied with their personal financial situation.
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