Annual Performance Review of Wal-Mart Stores, Inc

WMT 121815 58.84 Yld 3.33 PE 12.62 MP 80

Returns Since December 2015

WMT - 24.97%     WMT with "Divi-X" - 29.96%

This is now our second 'Play of the Week' Annual Review since we started this web site a year ago.  My initial intention was to post a new 'Play of the Week' every week for fifty-two weeks, and even though this is not a stock picking web site, I at least try to post articles about reasonably priced securities; which in my opinion have been few and far between this past year.

The whole purpose of the 'Play of the Week' Annual Reviews is to show readers the long-term success of the "Divi-X" System compared to not using the "Divi-X" System.  So, without further delay, let's see how our $10,000 investment fared in our Annual Review of Wal-Mart Stores, Inc, our second 'Play of the Week' chosen back on December 18th of 2015.

Company Profile

Wal-Mart Stores, Inc. is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company offers an assortment of merchandise and services at everyday low prices (EDLP). The Company operates through three segments: Walmart U.S., Walmart International and Sam's Club. The Walmart U.S. segment operates retail stores in approximately 50 states in the United States, Washington D.C. and Puerto Rico, with three primary store formats, as well as digital retail. The Walmart U.S. segment is a mass merchandiser of consumer products, operating under the Walmart or Wal-Mart brands, as well as walmart.com. The Walmart International segment consists of operations in over 27 countries outside of the United States. The Sam's Club consists of membership-only warehouse clubs and operates in approximately 48 states in the United States and in Puerto Rico, as well as digital retail. (Source:  Google Finance)

http://stock.walmart.com/investors/default.aspx

 

The Dividend Times: An Introduction to The "Divi-X" System

The Last Year

The Leverage Projection Worksheet

WMT Leverage Projection Worksheet 2015

click to enlarge

When I initiated coverage on WMT, the price was $58.84 a share with a dividend rate of $.49/qtr. which equated to a dividend yield of 3.33%.  Assuming a $10,000 investment with a "Multiplier  Pick" of 80, our yield was then able to afford us 48.52 additional shares giving us a grand total share count of 218.4678.  Using a "Multiplier Pick" of 80 leveraged us at a very tolerable 22.21%. 

Returns To Date

WMT Return Percentages 2016

click to enlarge

A few things to note about this chart:

  1. Right out of the gate, going back to Jan. 2016, "Divi-X" took a small lead over 'All Cash' of 2.51%.
  2. Our "Divi-X" lead widened to 6.27% back in June of 2016 but has since retreated and once again, "Divi-X" continues to lead over 'All Cash' by 4.99%.

Translation in Dollars

WMT Return Scenarios 2016

click to enlarge

Back in June of 2016, our "Divi-X" dollar advantage over 'All Cash' widened to a modest $627.61 ($13,205.95 less $12,578.74), however, since the pullback, "Divi-X" still holds a decent $499.13 advantage over 'All Cash.'  That's in addition to the already decent return of $2,497.17 provided our initial $10,000 investment. 

Also, take notice that the 'All Cash' (purple line) and the "Divi-X" (green line) is well above the 'Expected Return' line (red line), meaning that with or without "Divi-X", they are both exceeding the expectations we had for this stock when we initiated a position back in December 2015.

Dividend Yields


Now, for a look at our dividend picture.

WMT 20YR Dividend Yields

click to enlarge

A few things to note about this chart:

  1. You shouldn't expect anything to impressive on the dividend picture in the first two to three years of holding a position.  The main take away from this chart is that the "Divi-X" dividend growth rate is more than double that of 'All Cash' (0.18% to 0.07%).  That doesn't mean much now, but again, in two to three years, as the "Divi-X" dividend growth rate continues to leap frog 'All Cash,' this will become significant to your bottom line.

If you are reading this article and scratching your head, it's because you haven't learned our very simple system.
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Running Leverage Rate

The "Divi-X" System Workbook monitors one's 'Running Leverage Rate' to keep the user aware of if and when a deteriorating share price increases an investor's risk level beyond their acceptable risk tolerance level.

WMT Running Leverage Rate 2016

click to enlarge

A few things to note about this chart:

  1. Our initial leverage position started at 22.21%.
  2. Because the share price popped a bit immediately after buying at $58.84, you see an immediate dip in the 'Running Leverage Rate' or 'Levered Percentage' to 20.22% from 22.21%.  That's because the increase in market value reduced the percentage ratio of debt to market value.
  3. As of December 2016, our 'Running Leverage Rate' stood at 16.89%.  A decrease of 5.32% from where we started at a year ago.  At first glance, that may not seem significant, and you would be right.  In the absence of a meteoric increase in share price, you'll seldom see aggressive declines in the 'Running Leverage Rate' in the first couple of years because your loans are front-end weighted with interest.  In other words, early in a loan, most of your payments go towards interest.  But WMT is definitely going in the direction we want to see.

 

Taking a New Position

This is the part of the article where we forecast a new position, but in our 'Play of the Week' Annual Reviews, we are not doing that.  So instead, we're simply going to look at the 'Leverage Summary' results and our forecast for the remaining four of our five year projections.

WMT Leverage Summary 2016

click to enlarge

Our first year is already gone and I think you'll have to agree that "Divi-X" did not disappoint.  As you can see from the chart above, "Divi-X" took our preferences from last year (PmtPerc, Multiplier Pick, and Expected Return, etc.), projected that for us, and up till now, has even beaten that by 16.73%!  Because we are currently beating our expectations, you can see that cushion carry over to the remaining four years.  If nothing else, it does provide a 16.73% cushion towards future performance.

Conclusion

So far, "Divi-X" has been kind, but will our good fortune continue?  We'll see when we revisit Wal-Mart Stores, Inc again next year.  Till then, many happy returns!

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Authored by Lee Carroll Wentker

All screen captures are taken from 'The "Divi-X" System Workbook'

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The security showcased here is for learning purposes only. It is not a recommendation or an endorsement of any kind. Do your own due diligence before making any investment.

All work is copyrighted by The Dividend Times, LLC 2015 - 2016

 

 

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