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Walmart: Solid Dividend Yield

The Value Line Investment Survey® called attention to Walmart Inc. (WMT). The Dow-30 component and the owner of the world's largest retail chain operates more than 3,500 supercenters (includes grocery departments), 385 discount stores, 600 Sam's Clubs, and 800 Neighborhood Markets in the U.S., plus almost 6,000 foreign stores. The company has 2.2 million employees and a market capitalization that exceeds $325 billion.

“Favorable trends in same-store sales have been encouraging. Notably, e-commerce sales have shown enviable strength advancing 37% in the fiscal second quarter (year ends January 31st) thanks to strength in the online grocery business. Looking ahead, the top line should continue to push higher. The e-commerce business will probably remain the standout and more than offset any softness in international sales.

Overall, based on company data and surveys, consumers will likely remain active owing to their confidence about the economy, which augurs well for Walmart's outlook,” notes Richard Gallagher, Associate Director, Value Line Research.

“In a competitive retail environment, Walmart has found some successful strategies to compete with Amazon. The recently introduced Competitive Price Adjustment program represents a good initiative for Walmart to offer lower prices to compete with the online juggernaut. Efforts to shorten shipping times is another worthwhile endeavor, given Amazon's competitive advantage here.

Elsewhere, the retail chain's grocery pickup service is a differentiator that Amazon will have a difficult time replicating in terms of scale for the foreseeable future. Finally, Walmart is testing an in-home delivery service that represent another way it is trying to make inroads with consumer through new services.

“We think that the stock holds ample investment merits, particularly for conservative investors. Walmart's breadth of operations and financial strength put it in an enviable position and, to no surprise, the equity holds our top rank for Safety. In addition, risk-averse investors may find WMT's solid dividend yield and dependable business model appealing,” says Gallagher.

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