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 2024 outlook for stocks becoming increasingly opaque, it's understandable if investors are tilting toward more defensive names, such as WMT, these days.
As a low-beta stock, Walmart stock does tend 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's defensive characteristics certainly came in handy in 2022. The S&P 500 generated a total return (price change plus dividends) of -18.1%, a historically bad result. On the other hand, Walmart's total return came to -0.5% – or essentially flat – to beat the broader market by more than 17 percentage points.
The other side of WMT's defensive coin can be seen in its performance during 2023's remarkable rally. While the S&P 500 returned more than 26%, Walmart returned less than 13%.
Sadly for long-term shareholders, the past couple of decades have delivered more of the latter-type performance than the former. 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.
The bottom line on Walmart stock
Walmart stock was actually one of the best stocks of the 30 years between 1990 and 2020, but as you can see in the chart below, WMT basically traded sideways for the first decade-plus of the 21st century.
(Image credit: YCharts)
Walmart shares went nowhere for a long time, but then that's not necessarily unusual given how far and fast they appreciated during the bubblicious 90s. Between the beginning of 1997 and the end of 1999, WMT gained more than 500% on a price basis. The broader market didn't quite double over the same span.
Also weighing on WMT during the first decade of the new century was the threat from e-commerce. Walmart responded by becoming the second largest e-commerce retailer in the U.S. after Amazon.com (AMZN) – albeit a distant second. Walmart got serious about its digital strategy sometime around 2006, but it took a while for what was regarded as "show-me" story to ultimately prove successful.
Whatever the causes, that lost decade on Walmart's stock chart really hurts its long-term results. Over the past 20 years, WMT stock has generated an annualized total return of just 7.7%, vs 9.8% for the S&P 500.
To get a sense of what that sort of underperformance looks like on an account statement, have a look at the chart below.
(Image credit: YCharts)
This chart illustrates the disconcerting fact that if you invested $1,000 in Walmart stock 20 years ago, today it would be worth only about $4,400. The same thousand bucks invested in an S&P 500 ETF would be worth somewhere in the neighborhood of $6,500 today.
For its entire history as a publicly traded company, WMT's annualized total return does beat the broader market by a bit more than 7 percentage points. Over the more realistic time frame of the past 20 years, however, there's no way around it: Walmart has been a buy-and-hold bust.
This chart illustrates the disconcerting fact that if you invested $1,000 in Walmart stock 20 years ago, today it would be worth only about $5,300. The same thousand bucks invested in an S&P 500 ETF would be worth somewhere in the neighborhood of $7,200 today.
Investing $1,000 In Walmart IPO: Walmart offered shares for $16.50 on Oct. 1, 1970 for its IPO. A $1,000 investment could have purchased 60.61 shares of Walmart stock.
2024, the S&P 500 has posted an average annual return of 9.74%, right about in line with its long-term average. Here's how much you would have now if you invested in the S&P 500 20 years ago, based on varying starting amounts: $1,000 would grow to $2,533. $5,000 would grow to $12,665.
Ten Year Stock Price Total Return for Walmart is calculated as follows: Last Close Price [ 67.02 ] / Adj Prior Close Price [ 20.40 ] (-) 1 (=) Total Return [ 228.5% ] Prior price dividend adjustment factor is 0.81.
Historical daily share price chart and data for Coca-Cola Consolidated since 1990 adjusted for splits and dividends. The latest closing stock price for Coca-Cola Consolidated as of June 14, 2024 is 1004.01. The all-time high Coca-Cola Consolidated stock closing price was 1036.01 on June 11, 2024.
Microsoft's return is even more impressive than Apple's, as it turned $1,000 invested in its 1986 IPO to $4.1 million now. However, Microsoft's stock ride was rather bumpy, as its stock turned $1,000 into nearly $600,0000 by the turn of the century.
Walmart has a consensus rating of Strong Buy which is based on 25 buy ratings, 3 hold ratings and 0 sell ratings. What is Walmart's price target? The average price target for Walmart is $72.92. This is based on 28 Wall Streets Analysts 12-month price targets, issued in the past 3 months.
Why did Warren Buffet sell nearly all of his shares in Walmart? Because of difficulty of brick and mortar companies competing with e-commerce firms. It is not only Walmart but many others that have lost value in their shares because of slow integration to e-commerce. Buffett first bought Walmart shares in 2005.
In fact, at the end of the five years, if you invest $1,000 per month you would have $83,156.62 in your investment account, according to the SIP calculator (assuming a yearly rate of return of 11.97% and quarterly compounding).
Think About This: $10,000 invested in the S&P 500 at the beginning of 2000 would have grown to $32,527 over 20 years — an average return of 6.07% per year.
For example, if an investment scheme promises an 8% annual compounded rate of return, it will take approximately nine years (72 / 8 = 9) to double the invested money.
Costco Wholesale (NASDAQ: COST) has an impressive record behind it, with the business growing strongly for years and the stock price rising along with it. At this point, share prices have soared over 600% in just 10 years compared to a far less impressive 170% gain for the S&P 500 index.
According to the latest long-term forecast, Walmart price will hit $90 by the end of 2025 and then $95 by the end of 2026. Walmart will rise to $100 within the year of 2027, $110 in 2028, $125 in 2029 and $150 in 2031.
Ten Year Stock Price Total Return for Coca-Cola is calculated as follows: Last Close Price [ 62.99 ] / Adj Prior Close Price [ 29.61 ] (-) 1 (=) Total Return [ 112.7% ] Prior price dividend adjustment factor is 0.73.
According to the latest long-term forecast, Coca-Cola price will hit $65 by the end of 2024 and then $70 by the middle of 2026. Coca-Cola will rise to $80 within the year of 2028, $95 in 2029, $100 in 2030, $110 in 2031 and $125 in 2034.
1 At 10%, you could double your initial investment every seven years (72 divided by 10). In a less-risky investment such as bonds, which have averaged a return of about 5% to 6% over the same period, you could expect to double your money in about 12 years (72 divided by 6).
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