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  • Wal-Mart: Dividend Stock Analysis [View article]
    Well one decade ago the stock was overpriced:


    Now it is attractively valued. And you are getting paid a 2.80% yield that is growing in the double digits.
    Jun 17, 2011. 10:26 AM | 6 Likes Like |Link to Comment
  • Wal-Mart: A High Dividend Growth Stock [View article]
    Actually the yield is more like 2.40%. When I wrote the post the yield was 2.20% ;-)

    I don't search for the highest dividend yielding stocks, as I have found this to be an exercise in futility - I find a high yielding stock, which then cuts dividends and I say to myself that I would have been better off in the dividend growth stocks I typically write about.

    Of course not all high yield stocks are bad, but then without understanding why the yield is high one could make a bad decision just focusing on yield alone.

    I like WMT particularly because there are always so many shoppers there any time of the day/week I go there. In comparison the parking lots of many WAG's I go to are often empty. The company doesn't pay all of its earnings in dividends so what, the company is still growing.. Growing profits, equals growing dividends, which somewhere down the line will lead to a higher stock price. In comparison most high yielders would pay you a high dividend today ( provided it is sustainable and the dividend doesn't get cut), and then chances are the purchasing power of the dividend would be diminished. In addition with most high yielders your ownership stake will be dilluted because high yielders expand by selling more stock or taking on more debt.

    So which one is better? A company with a P/E of 10, paying a 3% dividend OR a company with a P/E of 10 paying a 10% dividend?
    Jul 23, 2010. 04:30 PM | 8 Likes Like |Link to Comment
  • Wal-Mart Remains a Below Average Dividend Stock [View article]
    The problem with WMT was that it was overvalued in the 1990s, and everyone was excited and willing to pay top dollar for it. Nowadays noone is excited about WMT, hence the low multiple.
    But you know what, if WMT keeps raising dividends by 11% annually, your yield on cost would double in 6.5 years. The business is strong, the stock has gone nowhere for a decade, but then the market has not gone anywhere either. The business is strong, has a strong competitive advantage and it is one of the few companies I am willing to purchase at yields below 3%...
    Mar 5, 2010. 09:16 AM | 2 Likes Like |Link to Comment
  • Dividend Analysis: Wal-Mart [View article]

    I always look at how the companies performed over the past 10 years. Just because the company's stock has not appreciated significantly over the past 10 years doesn't make be hate the stock. 10 years ago nobody liked Russian Stocks. Now Russian stocks have appreciated a lot. Individual investors always like to buy the stocks that rose a lot in the past. And thus buy high and later most of them sell low.
    And even if I had picked the end of 1998, the stock price would have been in the 40's adjusted for the 2:1 split in 1999 and you still would have been ahead.
    I like the idea of a company that raises its dividends year after year. In WMT's case the company doubles its dividend every three and a half years. Which means that a 2% yield now would translate into a 4% yield in 2011-2012.
    You could also read more about my stock screening criteria here:

    Mar 26, 2008. 03:11 PM | Likes Like |Link to Comment
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