There are currently eight publicly traded companies with market capitalizations of $1 trillion or more: NVIDIA, Apple, microsoft, Alphabet, Amazon, Metaplatforms, teslaand Berkshire Hathaway.
Those stocks are well-known, and for good reason: they have made many investors rich. However, none of them are particularly known as dividend stocks, and the trillion-dollar club has so far excluded long-time dividend payers. However, that could change soon.
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Walmart (NYSE: WMT)The world’s largest retailer and the world’s largest company by revenue, has quietly taken the rest of the retail sector by storm in recent years as its commitment to omnichannel sales and reputation for everyday low prices have generated a constant growth. Meanwhile, many of its peers have struggled with inflation and weak consumer spending.
Walmart reported another round of strong quarterly results Tuesday morning. Top-line growth was strong across the board, with comparable store sales (comps) increasing 5.3% in U.S. stores (excluding fuel), its best performance in at least five quarters. And Sam’s Club, its members-only warehouse retail chain, reported 7% growth in sales excluding fuel.
In its international segment, which has historically been a challenging segment for the company, constant currency revenue increased 12.4% to $30.3 billion. Overall, revenue rose 5.5% to $169.6 billion, beating the consensus of $166.6 billion.
The retailer also delivered solid margin improvement, with gross margin increasing 21 basis points to 24.2%, driven by lower markdowns at U.S. stores and strong inventory management. Overall operating margin also expanded, as operating income rose 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 stores performed well, but are also benefiting from growing emerging businesses like advertising, where revenue is up 28%, and global e-commerce remains strong with sales up 27% as it gains market share on Amazon and other competitors.
The company also raised its guidance, showing greater confidence in the Christmas quarter. It now expects net sales to rise between 4.8% and 5.1% and full-year adjusted earnings per share of between $2.42 and $2.47.
Image source: Getty Image.
Walmart’s market capitalization surpassed $700 billion for the first time on Tuesday, November 19, meaning the company is approaching a market capitalization of $1 trillion. At its current valuation, the stock would only need to grow 43%, which seems achievable given its recent momentum. The stock is up 66% so far this year, although it will be difficult to repeat that performance next year.
At this point, the biggest risk to the stock appears to be its valuation. According to its EPS guidance for this year, the stock is trading at a price-to-earnings ratio of 35, which is well above most of its retail peers, putting it on par with the trillion-dollar Big Tech companies. dollars. clubs like Microsoft and Apple.
Walmart has earned that premium thanks to its recent execution and history of consistent growth and expanding margins. Ten years ago, many thought Amazon would sideline the company, but it has responded to the challenge by developing its omnichannel business, taking advantage of new growth opportunities such as advertising, and strengthening its competitive advantages in areas such as price and convenience.
As Walmart’s valuation has skyrocketed, its dividend yield has fallen to just 1%, but the company’s track record of dividend increases is unmatched by any company in the trillion-dollar club. It has increased its dividend annually for 51 consecutive years, making it the Dividend King.
Walmart’s third-quarter earnings report was virtually perfect and is a reminder to investors that the company still enjoys several competitive advantages, such as economies of scale; a recession-proof business model that leans toward food and grocery; and growth opportunities in advertising, e-commerce and more.
The stock may look expensive at its current valuation, but the company has just demonstrated its ability to grow in a difficult environment. As it focuses more 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 revenue, Walmart seems like a great choice.
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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. Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions at Amazon and Meta Platforms. The Motley Fool positions and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Tesla, and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
This dividend king is on track to join the trillion-dollar club. Is it a purchase? was originally published by The Motley Fool
