Walmart (NYSE:WMT) stock has resumed trading after its 3-for-1 stock split over the weekend.
The price of the new shares was $58.52 each as WMT stock prepared to open this morning.
CEO Doug McMillon wrote in announcing the split that company founder Sam Walton wanted employees to be able to buy full shares as part of the company’s stock purchase plan. Walmart has about 2.1 million employees.
Walton’s Stock Parking Lot
Having stock in the hands of employees can give it long-term stability. A majority stake in Walmart is still held by the late Sam Walton’s children, who have a combined worth of $267 billion.
As the largest U.S. retailer, with sales of $678 billion last year, WMT stock closely mirrors the S&P 500 average. That means an average annual return of 20% when dividends are added to capital gains. Walmart’s dividend, now 83 cents, yields 4.25%. This is why many analysts recommend it to long-term investors.
Retailers have thin margins and slow growth rates but make up for it on volume. In 2023, a good year for the company, Walmart only reported 2.3% of sales as net income. But that meant profits of over $15 billion, meaning the dividend is well-supported by earnings.
McMillon, who has been CEO for a decade, has focused on competing more closely with Amazon (NASDAQ:AMZN). This includes more delivery and pick-up options, which he says will now include drones. Walmart has also followed Amazon into advertising, buying TV maker Vizio for its customer data. Walmart now makes more from advertising than it spends.
Walmart’s split will also mean a shake-up in the Dow 30. The average is replacing Walgreens (NYSE:WBA) with Amazon. The split also reduces Walmart’s weight in the average by two-thirds.
WMT Stock: What Happens Next?
Walmart remains one of the safest stocks for a conservative investor. Also, ignore the Dow, which is just marketing.
As of this writing, Dana Blankenhorn had a LONG position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
