Walmart Inc. (WMT) was founded in 1962 in Rogers, Ark., by Sam Walton. Since its humble beginnings as a regional discount retailer, it has become an American multinational retail company with over 11,000 retail locations and 2.2 million employees across the globe. If you had purchased 100 shares of Walmart on Oct. 1, 1970, at its initial public offering (IPO) price of $16.50 per share, after stock splits, your investment would be worth over $4.3 million.
- Walmart's initial public offering was on Oct. 1, 1970, when it offered 300,00 shares at $16.50 per share.
- Investing in 100 shares (or $1,650) in Walmart’s IPO would be worth over $4.3 million today.
- On Walmart's 25th anniversary in 1987, it had 1,198 stores with sales totaling $15.9 billion. Today it has more than 10,000 stores and generates more than $500 billion in revenue.
- In addition to its favorable stock offering, Walmart has also increased its dividend payments for 48 consecutive years.
The Start of Walmart
Sam Walton opened his first discount retailer, Walton's Five and Dime in 1950 on 105 N. Main Street in Bentonville, Ark. After the success of his first store, he opened the first Walmart on July 2, 1962.
By 1967, Walmart had 24 locations with $12.6 million in sales. On Walmart's 25th anniversary in 1987, it had 1,198 stores with total sales of $15.9 billion and 200,000 employees. Three years later, Walmart Stores surpassed its competitors to become the nation's largest retailer. It had sales of $32.6 billion in 1990, which outpaced its competitor Kmart Corp. As of May 2021, Walmart has 10,526 stores worldwide and generates $559.2 billion in annual revenues.
Walmart IPO and Stock Splits
Walmart Stores was incorporated on Oct. 31, 1969, and offered 300,000 shares of its common stock at $16.50 per share during its IPO. If you were lucky enough to purchase just 100 shares at $16.50 per share, you would have only paid $1,650. Walmart's common stock began trading on the New York Stock Exchange on Aug. 25, 1972.
Walmart has had 11 two-for-one stock splits since its IPO. A stock split is a corporate action in which a company increases its amount of shares while simultaneously decreasing its market price. Walmart distributed its first two-for-one stock split in 1971 when it traded at $47 per share. Therefore, if you purchased 100 shares, you would have had 200 shares at a price of $23.50 per share after the stock split.
Walmart issued 10 more two-for-one stock splits thereafter. As of 2021, its most recent two-for-one stock occurred in April 1999 when it was trading at $89.75 per share. Previous to this stock split, you would have owned 102,400 shares at a price of $89.75. After Walmart distributed its 11th two-for-one stock split, you would have owned 204,800 shares of Walmart's common stock with a cost basis of $0.81 per share. Therefore, the market value of your investment would have remained at $9.19 million after this stock split.
Walmart’s Market Value, Dividends
As of May 28, 2021, Walmart shares were trading at $142 per share. Therefore, those 204,800 shares you would have had would be worth $29 million. Although its stock splits may have seemed uneventful, stock prices generally reclaim their previous highs and often exceed them. If Walmart never split its stock, it would have been trading at an extremely high market price per share, and therefore, it would have scared off the average investor. Moreover, you would have only owned 100 shares of Walmart, if you did not add to the investment.
Walmart is included in the S&P 500 Dividend Aristocrats, an exclusive group of dividend-paying stocks. S&P 500 Dividend Aristocrats are companies that have increased their dividend payments for 25 consecutive years and are included in the S&P 500 Index. Walmart has paid a dividend since 1975 and has increased its dividend for 48 years. Additionally, as of May 2021, it has a dividend yield of 1.55% and a quarterly dividend rate of $2.20.
Walmart has a high dividend coverage ratio, meaning it can relatively easily pay its dividend with cash flow. Walmart’s dividend payout ratio is roughly 43%, meaning it’s paying out 43% of its earnings via dividends.