Walmart Stock: A Defensive Pick with Dividend Growth

Introduction

When it comes to blue chip stocks that pay dividends and play defense, Walmart’s (WMT) reputation is pretty tough to beat. And with the market’s remarkable 2023 rally starting to lose steam, it’s understandable if investors are increasingly looking at more defensive names, such as WMT, these days.

Defensive Characteristics

• As a low-beta stock, Walmart stock tends to hold up better than the broader market when everything is selling off.
• Walmart’s fundamentals are essentially defensive, too. As an anchor of the consumer staples sector, Walmart sees comparatively stable demand through the business cycle.
• Walmart is one of the best dividend stocks for dependable dividend growth. It has increased its payout annually for 50 years and counting.

Performance in 2022

Walmart’s defensive characteristics came in handy last year. While the S&P 500 generated a total return of -18.1% in 2022, Walmart’s total return came to -0.5% – beating the broader market by more than 17 percentage points.

Long-term Performance

Unfortunately, the past couple of decades haven’t been as kind to WMT stock as 2022. A torrid run in the 1990s, the market’s secular preference for growth over value, and worries about Walmart’s place in an increasingly digital world have conspired to make WMT stock a long-time market laggard.

Prospects and Wall Street Opinion

Walmart stock has been a buy-and-hold bust over the past 20 years. However, for its entire history as a publicly traded company, WMT’s annualized total return does beat the broader market by 7.5 percentage points. Wall Street is pretty bullish on the name at current levels, with a consensus recommendation of Buy.