Tuesday, February 26, 2013

Latest buy: WMT

The DOW is almost at its nominal all-time high. That doesn't mean all stocks are expensive, some are, some are fairly valued, and some are cheap. Even in an overvalued market, there are opportunities to pick op great businesses for reasonable prices. Back during the dot-com boom, it was really a large-cap stock bubble. Small stocks were perfectly fine. Most never were overvalued terribly, so they just kept plugging away as the tech bubble popped.

That said, I decided to pick up this dividend champion.

Today's buy:

  • 21 shares of Wal-Mart Stores, Inc. (WMT) @ 71.00$

This Purchase will add $39.48 to my annual dividend income.

On the 21st of February 2013 WMT announced a dividend increase, a very hefty 18% increase. The stock has gone nowhere for the last decade, due to overvaluation in the year 2000. WMT has a very good track record of EPS growth during that period. As of today, shares trade around a TTM P/E of around 14.

The dividend record is one of the most beautiful things I've ever seen.

Thanks for reading, take care.


  1. Exponential,

    Great buy here. I've been a little concerned about WMT's moat potentially eroding from the onslaught of mobile shopping, but I still think it's a long-term winner. Great track record of dividend growth and the lack of share price expansion over the last decade was due to overvaluation at the beginning of the last decade, as you note.

    Great stuff.

    Best wishes!

    1. Dividend Mantra,

      I understand your concerns. I do believe though, Wal-Mart will keep its moat wide, they're able to buy in their goods cheap, those low prices they can pass on to their customers like no other retailer can do.
      I also think Wal-Mart has some great growth opportunities in Asia.

      About the overvaluation, anyone who says that stocks are bad investments and that they just “rip people off” and who cites the past 12 years as an example doesn't, know what he's talking about.

      The return you earn on your money ultimately depends upon the price you pay relative to the cash generated by the investment.

      If you pay 50x earnings for a mega-cap stock like WMT, you'll have bad results as the last 12 years show. I believe WMT at todays prices is a fine investment for the long term.

      Take care.

  2. I like me some WMT, and that dividend increase was incredible. I didn't expect anything close to almost 18%. I'd love a pull back to the mid to upper $60's to add to my position, but who knows what Mr. Market will gives us.

    1. Passive IncomePursuit,

      Yes, the last dividend increase was really extraordinary. I was hoping the stock would drop down more on rumours of "disastrous sales".

      If the stock pulls back to the mid $60 I'll probably buy more.

      Take care.