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Wal-Mart (WMT) has been a mainstay of American culture since 1962, when the founder Sam Walton first endeavored to "help people live better." Since then, the company has often found itself in the middle of a public opinion war, with one side decrying its ruthless business practices and poor treatment of workers, and the other side defending the company's ability to employ millions of people while offering low-priced consumer goods. It's a Jekyll and Hyde scenario that leaves many wondering which side of Wal-Mart's split personality accurately reflects the soul of the company.

Wal-Mart: Corporate Evil Genius

Wal-Mart has been demonized by numerous populist-minded groups, from PBS' Store Wars to leftist advocacy group Demos. Reports issued by such groups paint a grim picture of America's largest retail store, accusing it of sending jobs overseas, keeping employees in poverty, and destroying small-town America. Frightening phrases such as "sweat shops," "below the poverty line," "anti-union," and "child labor" make frequent appearances in Wal-Mart exposé articles, causing at least some conscientious Americans to consider boycotting the retail giant. But that's not all there is to Wal-Mart.

Wal-Mart: Benevolent Benefactor

The other side of the coin is that Wal-Mart is the second-largest employer in America, coming in just behind the federal government in terms of the number of people who clock in for work each week. Cashiers and associates receive entry-level wages, but that's no different than most retail positions. And Wal-Mart offers its employees the ability to buy stock at a discount, matching up to 15% of the first $1,800 in stock purchased. Despite its no-union stance, Wal-Mart executives encourage employees to come speak with management under its open-door policy. And the company has also issued a strong anti-sweat shop statement, assuring stockholders that it takes great pains to do business with legal and ethical manufacturers.

How Does Wal-Mart Stack Up Against Competitors?

Target (TGT), one of Wal-Mart's closest competitors, offers surprisingly similar wages and benefits to its employees. Greeters, cashiers, stock personnel, and customer service associates make almost identical hourly wages at the two stores. Managers and pharmacists at Target make slightly higher annual salaries than their Wal-Mart counterparts, but Wal-Mart makes up for it by offering double in employee bonuses. According to labor advocacy groups, Target scores just about the same in terms of working conditions, overseas manufacturing jobs, and health care benefits. For whatever reason, however, Target has been able to maintain its image as a model corporation, while Wal-Mart has been cast as the evil corporate giant willing to rampage over the rights of its workers in order to make a buck.

Which is the Real Wal-Mart?

In an economic climate where every job counts and more disposable income is going toward necessities like food and clothing, questions about Wal-Mart's business practices sometimes take a back seat. The fact remains that the retailer employs a huge slice of the population, including more minorities than any other company, and that it offers consumer goods at unbeatable prices. America's shoppers are voting with their wallets, and the answer is overwhelmingly in favor of the rock-bottom prices and numerous jobs Wal-Mart brings to the table.

In the fast food industry, McDonald's (MCD) has faced a similar Jekyll and Hyde representation. Following the negative press garnered by books such as Eric Schlosser's Fast Food Nation and the corresponding movie Supersize Me, McDonald's faced severe criticism for its unhealthy menu options and aggressive marketing to children. The company responded by incorporating healthier options into its menu, including fruit in Happy Meals, and scaling back its marketing approach when it comes to targeting youngsters.

If Wal-Mart hopes to retain a positive corporate image, it'll need to take some similar steps to appease the public conscience. And in fact, it has already taken the first positive step by instituting new sustainability policies that include reducing emissions, conserving energy, and reducing landfill waste.

The bottom line is that Wal-Mart isn't going anywhere. Despite complaints about long lines, dirty floors, low pay, and overseas jobs, people are still shopping-and working by the thousands at America's largest retailer. Investors can rest assured that Wal-Mart will continue to make good business decisions based on what its customers want. Its green energy policies communicate a positive message that Wal-Mart is listening to its critics and will adapt to our society's changing social conscience. Should we be satisfied with Wal-Mart's current business practices? Maybe not, but the company holds significant promise for the future as it continues to employ thousands of workers while offering the very best prices on the planet.

Unparalleled Free Cash Flow Among Retailers

If Wal-Mart were a country it would be, with total revenues of $447 billion for the last fiscal year, the 30th largest country in the world, behind Malaysia. But the beauty of the company is its vast and stable free cash flow.

Wal-Mart Cash Flow

Fiscal Year Ending Jan 31 2012

2012

2011

2010

2009

2008

Total cash from operations (millions USD)

24,255

23,643

26,249

23,147

20,642

Total cash from investing (millions USD)

(16,609)

(12,193)

(11,620)

(10,742)

(15,670)

Free Cash Flow - FCF (millions USD)

7,646

11,450

14,629

12,405

4,972

Total cash dividends paid (millions USD)

(5,048)

(4,437)

(4,217)

(3,746)

(3,586)

Issuance (retirement) of stock, net

(6,298)

(14,776)

(7,276)

(3,521)

(7,691)

Basic/primary weighted average shares (millions)

3,460

3,656

3,866

3,939

4,066

· Number of shares in 2012 / number of shares in 2008 = 85.0%

Target Cash Flow

Fiscal Year Ending Jan 28 2012

2012

2011

2010

2009

2008

Total cash from operations (millions USD)

5,434

5,271

5,881

4,430

4,125

Total cash from investing (millions USD)

(4,180)

(1,744)

(1,703)

(4,373)

(6,195)

Free Cash Flow - FCF (millions USD)

1,254

3,527

4,178

57

(2,070)

Total cash dividends paid (millions USD)

(750)

(609)

(496)

(465)

(442)

Issuance (retirement) of stock, net (millions USD)

(1,753)

(2,158)

(376)

(2,772)

(2,267)

Basic/primary weighted average shares (millions)

679

724

752

770

845

· Number of shares in 2012 / number of shares in 2008 = 80.3%

Source: ft.com

While Target has even bigger dividend coverage ratio for the 2012 fiscal year (1.67 vs. Wal-Mart's 1.51), Wal-Mart's cash flow is more stable, never dipping into negative territory in the last five years.

Every long-term dividend income investor needs a strong retail presence in his portfolio.

There are very few retailing industry alternatives out there as investable as Wal-Mart, even after the 30% rise in its stock price we have witnessed since 2009.

Source: Is Wal-Mart's Evil Image Deserved?