There are currently eight publicly traded companies with a market capitalization of $1 trillion or more: Nvidia, apple, Microsoft, alphabet, Amazon, Meta platforms, Teslaand Berkshire Hathaway.
These stocks are very popular, and for good reason: they have made a lot of investors rich. However, none of them are particularly known as dividend stocks, and so far the Trillion Dollar Club has excluded long-time dividend payers. However, this could soon change.
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Walmart (NYSE: WMT)the world’s largest retailer and the world’s largest company by revenue, has been quietly outpacing the rest of the retail sector in recent years as its commitment to omnichannel sales and reputation for everyday low prices has driven steady growth. At the same time, many of its peers have suffered from inflation and weak consumer spending.
Walmart reported another round of strong quarterly results Tuesday morning. Overall growth was strong across the board, with comparable store sales rising 5.3% at U.S. stores (excluding fuel), their best performance in at least five quarters. Sam’s Club, the members-only retail chain, reported comp growth of 7% excluding fuel.
In its international segment, which has historically been a difficult sector for the company, constant currency revenues rose 12.4% to $30.3 billion. Overall, revenue rose 5.5% to $169.6 billion, beating expectations of $166.6 billion.
The retailer also had strong margin improvement, with gross margin increasing 21 basis points to 24.2%, driven by lower markdowns in U.S. stores and strong inventory management. Gross operating margin also expanded, with operating income rising 8.2% to $6.7 billion. Adjusted earnings per share (EPS) rose from $0.51 to $0.58, ahead of the consensus of $0.53.
Walmart’s stores have performed well, but they are also benefiting from emerging growth businesses such as advertising, with revenue jumping 28%, and global e-commerce remaining strong with sales up 27% as it gains market share over Amazon and other competitors.
The company also raised its guidance, indicating increased confidence in the holiday quarter. It now expects net sales to rise 4.8% to 5.1% and full-year adjusted EPS of $2.42 to $2.47.
Walmart’s market cap surpassed $700 billion for the first time on Tuesday, November 19, meaning the company is approaching a $1 trillion market cap. At its current valuation, the stock would only have to grow 43%, which seems achievable given the recent momentum. The stock is now up 66% year to date, although it will be difficult to replicate that performance next year.
At this point, the biggest risk to the stock appears to be its valuation. Based on this year’s EPS guidance, the stock is trading at… Price to earnings ratio of 35, which is significantly higher than most of its retail peers, and puts it ahead of the big tech companies that make up the trillion-dollar club like Microsoft and Apple.
Walmart earned this premium thanks to its recent execution and track record of steady growth and expanding margins. Ten years ago, many thought the company would overtake Amazon, but it has responded to the challenge by building its omnichannel business, exploiting new growth opportunities such as advertising, and strengthening its competitive advantages in areas such as price and convenience.
As Walmart’s valuation has risen, its dividend yield has fallen to just 1%, but the company’s record of increasing dividends is unmatched by any company in the trillion-dollar club. It has raised its dividend annually for 51 years in a row, making it the dividend king.
Walmart’s third-quarter earnings report was nearly flawless, serving as a reminder to investors that the company still has many competitive advantages, such as economies of scale; a recession-resistant business model leaning toward food and grocery; And growth opportunities in advertising, e-commerce and beyond.
The stock may seem expensive at its current valuation, but the company has just proven its ability to grow in a difficult environment. With its increased focus on general merchandise, the company appears poised to continue its steady growth toward a $1 trillion market cap. If you’re looking for a balance between growth and income, Walmart seems like a perfect fit.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Susan Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jeremy Bowman He has positions in Amazon and Meta platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Tesla, and Walmart. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure policy.
This dividend king is on his way to joining the trillion-dollar club. Is it a buy? Originally published by The Motley Fool