After writing about how I wimped out during a recent opportunity to be frugal, I decided to set a small, achievable goal this week. I cut out spending on energy drinks, convenience store snacks, and iced coffees this week. To reward myself, I’ll drop a Ten $pot at Loyal3 today. I have 3 stocks on my radar: K, MCD, and WMT. I’ve recently added some K and MCD so I’ve decided to give WMT a $10 boost. Here’s 3 reasons why:
#1. Buffett’s Advice: Understand the company and find an economic moat
I understand Wal-Mart because I’ve dropped uncountable sums of $$$ there over my lifetime. Wal-Mart also has a huge “moat”.
Here’s a quick snippet from Wal-Mart’s website to back it up:
“Each week, more than 245 million customers and members visit our nearly 11,000 stores under 71 banners in 27 countries and e-commerce websites in 10 countries. With fiscal year 2014 sales of approximately $473 billion, Walmart employs 2.2 million associates worldwide.”
Wal-Mart was also ranked #1 on the 2014 Fortune 500 list. I suppose I could go on about Wal-Mart and Sam Walton’s success but I won’t.
#2. Dividend Aristocrat
WMT is a Dividend Aristocrat that has increased its dividend payout for 39 years! The current yield is about 2.5%.
#3. It’s a deal?
Determining if a stock is a good deal seems to be a little bit like black magic with some stats behind it. I’m trying to learn how to evaluate stocks but I’m not a professional so take this with a grain of salt.
– Current P/E is 15.7 versus a 5-year average of 14.3. This is higher than I’d like to see but WMT’s P/E is still below the industry average of 17.3 and S&P’s 18.6. (Stats taken from Morningstar)
– Its current payout ratio is between 30-50% depending on where you look. Still a good range for me.
– WMT’s stock price is almost 6% below its 52-week high. Not necessarily a clearance price, but still decent given that many stocks are at or near high points right now.
So there you have it. 3 reasons I dropped $10 on WMT using my Loyal3 account. Have a wonderful 4th of July for those of you in the U.S.