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Wal-Mart (NYSE:WMT) is the #1 rated dividend stock in my dividend portfolio. In addition to the many reasons we all have heard many times, such as a long-time increasing dividend payout, I believe there are three major reasons to warrant buying and holding shares in Wal-Mart Stores, Inc. (WMT) for the next 30 years.

Reason #1 - Declining US Standard of Living

It seems that most analysts are focused on the U.S. same store comps for Wal-Mart which measures sales of U.S. Wal-Mart stores that have been open longer than a year. These comps have been trending lower in recent years, and this is definitely a major reason why the stock has been held down. Note: Since, I'm focused on a long-term dividend play here, I'm completely fine with a suppressed stock price.

The reality is that as an investor, I'm not concerned about U.S. sales at all. I believe there is a firm floor underneath these sales based on the macro economic environment here in the States.

Unfortunately, because of structural employment issues and an over-indebted society, I believe that the U.S. will be experiencing a long and slow decine in the standard of living for the masses. Wal-Mart sells the cheapest goods anywhere and I believe that this will put a floor in U.S. sales. Side note: I like McDonald's Corporation (NYSE:MCD) for similar reasons.

U.S. sales aren't likely to grow substantially from current levels, but they will remain firm and generate tons of cash that will fuel international growth and fuel dividend increases.

Whether the U.S. economy struggles with inflation or a double-dip recession, I'm confident that consumers will turn to Wal-Mart to save money on every day items. There are far more risky bets than this.

Reason #2 - Incredible International Growth Strategy

Now, the amazing story about Wal-Mart comes with the international part of the company. I believe Wal-Mart is easily one of the most underrated international and emerging market stories in the global economy. As you can see in the follow chart, Wal-Mart has stores all over the world:

Mexico 1,767 Entered November 1991
Canada 325 Entered November 1994
Brazil 480 Entered May 1995
Argentina 64 Entered August 1995
China (*) 333 Entered August 1996
United Kingdom 386 Entered July 1999
Japan (*) 414 Entered March 2002
Costa Rica 182 Entered September 2005
El Salvador 78 Entered September 2005
Guatemala 176 Entered September 2005
Honduras 55 Entered September 2005
Nicaragua 61 Entered September 2005
Chile 285 Entered January 2009
India 5 Entered May 2009
Wal-Mart International* 4,611


* China includes a 35% interest in Trust-Mart, which operates 104 stores in China.

Source: Wal-Mart International

My favorite part of the Wal-Mart International strategy is that the company utilizes local brands in other countries. Perhaps part of the reason that analysts don't give Wal-Mart the credit as an emerging markets play is that often times the stores aren't the typical Wal-Mart that you see down the road from your house?

For example, in Mexico, while Wal-Mart has 195 Supercenters and 111 Sam's Club locations, it also has the following:

  • 408 Bodega Aurerra Express Locations

  • 348 Bodega Aurerra Locations

  • 75 Superama Locations

  • 366 VIPS Restaurants

  • 174 Mi Bodega Aurrera Locations

  • 90 Suburbia Locations

In Brazil, Wal-Mart has 480 stores across nine different brands. Earlier this month, Wal-Mart announced it will invest and open another 80 stores in Brazil. This is nothing new and should continue as this economy grows in the years to come.

India - a prime target of Wal-Mart with its billion plus potential consumers - is a different ball game as the country has laws preventing foreign companies from directly operating big box type retail stores in India. Despite the laws, Wal-Mart's management is hard at work to penetrate the market. In fact, the five retail units the company currently has in India are wholesale operations under the name of BestPrice Modern Wholesale. You can be confident that Wal-Mart will continue to work its way into the growing Indian economy.

Obviously China is another major play for Wal-Mart, which currently has 333 retail units in the country. Many of the units are under the Trust-Mart brand which Wal-Mart invested in back in 2006. The company plans to grow its China operations significantly in the years ahead.

Moreover, Wal-Mart just acquried Yihaodian, a fast growing e-commerce site in China. I absolutely love this move as it is a one-two punch of an emerging markets and multi-channel (which we will get into next) play. Yihaodian is a major online retailer that sells everyday items such as diapers to consumers in China.

Lastly, Wal-Mart is entering the South African market pending regulatory approval for its 51% acquisition into Massmart. While the regulatory process may have obstacles along the way, I believe Wal-Mart will be successful eventually in penetrating this market via the Massmart brand. Just another example of the proven international growth strategy it has been implementing for almost twenty years now. Since 1991, Wal-Mart has essentially flown "under the radar" as an emerging markets/international play, possibly because of the brand strategy it uses. This indeed offers investors an attractive opportunity.

I just hit on some of the major international plays for Wal-Mart. You can visit the website to see more details on the various brands and number of retail units in every country in which Wal-Mart operates.

Reason #3 - Multi-Channel Strategy

As I just hinted at with the acquisition of Chinese e-commerce company, Yihaodian, Wal-Mart is embarking upon a mission to be the "the leading global multichannel retailer", as Eduardo Castro-Wright, vice chairman, Wal-Mart Stores, Inc. and CEO of Wal-Mart Global e-Commerce and Global Sourcing likes to say.

Moreover, the recent U.S.-based acquisition of social media company Kosmix is setting the stage for the backbone of this mult-channel strategy. Wal-Mart is forming a division known as @WalmartLabs to address innovation and integration between bricks and mortar stores and e-commerce.

Kosmix co-founder Anand Rajaraman who is now helping to lead @WalmartLabs says the following in a recent blog post:

We are at an inflection point in the development of ecommerce. The first generation of ecommerce was about bringing the store to the web. The next generation will be about building integrated experiences that leverage the store, the web, and mobile, with social identity being the glue that binds the experience. Walmart’s enormous global reach and incredible scale of operations -- from the United States and Europe to growing markets like China and India -- is unprecedented. @WalmartLabs, which combines Walmart’s scale with Kosmix’s social genome platform, is in a unique position to invent and build this future.

And in another blog post:

Today also is the first day in the life of @WalmartLabs. As I wrote in my prior post, our mission is to invent the next generation of ecommerce: integrated experiences that leverage the store, the web, and mobile, with social identity being the glue. We are at an inflection point in the development of retailing. Social media and the mobile phone will have as profound an effect on the trajectory of retail in the early years of the 21st century as did the development of highways in the early part of the 20th century. @WalmartLabs, which combines Walmart’s scale with Kosmix’s social genome platform, is in a unique position to invent and build this future.

Wal-Mart: Retail dinosaur or on the cutting edge of the next wave of ecommerce innovation? I think this acquisition definitely helps position the company into the latter category.

As I shareholder, I admit that I was a little confused about the acquisition at first. After researching it, I can confidently tell you that I'm absolutely thrilled it.

Coupled with the acquisition of Chinese e-commerce site Yihaodian, Wal-Mart understands clearly the rise in online retailing and is positioning itself to be at the forefront of the trend for decades.

Conclusion

Wal-Mart is an oustanding company. While the stock price has been somewhat stagnant over the last decade, this offers the investor an attractive entry point to get into this stock. Wal-Mart has not had moves in its stock like other international plays like McDonald's and Yum! Brands (NYSE:YUM).

The dividend history of Wal-Mart also makes the company extremely attractive over the long run as investors have a high degree of confidence that dividends should continue to rise on an annual basis in the years and decades ahead.

I purchase Wal-Mart stock via a DRIP plan and also plan to buy larger chunks of shares should the stock price move lower towards $50. The stock is a buy at current levels and a screaming buy near or below $50.

You can see my entire dividend portfolio with target prices here.

Disclosure: I am long WMT, MCD.

Source: 3 Reasons You Want to Own Wal-Mart for the Next 30 Years