Wal-Mart’s Media Frenzy Doesn’t Bother Buffett… And It Shouldn’t Bother You Either

Brian Kehm By Brian Kehm, Financial Research Associate, The Oxford Club

Dividend Investing

Managing Editor’s Note: At Wealthy Retirement, our views don’t reflect the bombastic headlines you see on Fox News and MSNBC. Far from it. When we see some overblown scandal causing investors to panic-sell, we feel sorry for them… Especially when the stock offers a rock-solid dividend.

For today’s issue, we asked Brian Kehm – a Research Analyst at The Oxford Club – to look at one ongoing example. Find out below why he says investors should take a page from Warren Buffett’s book and relax…

A major big-box retailer recently made headlines for its growing crime problem.

But don’t let that deter you. Its stores are safe. And it just reported its seventh straight quarterly increase in foot traffic.

Best of all, its stock is cheap. Wall Street hates it, and it presents an incredible opportunity for dividend investors.

While 200 violent crimes have occurred at Wal-Mart (NYSE: WMT) this year, we have to put that into perspective.

Wal-Mart employs 1.5 million U.S. workers. That’s a whopping 1% of the United States labor force.

Each week, Wal-Mart serves 260 million customers. And those individuals come from every nook and cranny of our communities.

So 200 violent crimes this year really isn’t an anomaly. It just makes for a story with a catchy headline.

If you want to make money in stocks, you need to tread lightly with this fodder.

Ignoring 99% of these “stories of the week” will make you a better investor. Here’s why…

Ignore the Headlines

The mainstream media survives by preying on unassuming readers. They target your emotions and craft eye-catching articles chock-full of hyperbolic reporting.

But rarely do they offer a useful or actionable idea.

If you follow popular news, you follow the herd.

The media perpetuates your fear of the market dropping another 30%… or climbing another 50%. It’s almost always late to the party.

That’s why the average investor, who buys at market tops and sells at bottoms, usually loses out.

It’s also why one of the world’s best investors, Warren Buffett, ignores the noise. He doesn’t use a computer in his office. He limits emotional investing by scanning balance sheets instead. Popular news plays little to no part in his investment process.

The recent media coverage on Wal-Mart’s crime is not a concern for investors. So it shouldn’t surprise you to learn that one of Wal-Mart’s largest shareholders is… Warren Buffett.

Wal-Mart is a great business that rewards large and small shareholders who are disciplined enough to ignore the noise and hold tight.

Discount Dividends

Wal-Mart is one of the world’s largest discount retailers. It sells food and products that folks need.

No matter what the market does, Wal-Mart keeps pulling in revenue. This is just one factor allowing Wal-Mart to continue paying a steady, growing dividend.

To see what I mean, let’s look back over the last two decades.


In 1995, you could have bought Wal-Mart shares for $12. At that time, Wal-Mart paid a $0.10 annual dividend… for a near 1% yield. And each year since then, the dividend has increased.

Over the last 21 years, you would have collected $16.61 per share in dividends. That’s more than your  initial investment!

Today, Wal-Mart pays an annual dividend of $2.00. It’s turned its 1% yield into an incredible 16.7%.

Wal-Mart is expanding into new markets around the world and continually creating new revenue streams. Its revenue also grows with inflation, and its products are always in demand. It boasts a low payout ratio of just 30% (based on free cash flow) so its dividend should remain safe.

The bottom line? Wal-Mart investors will keep collecting income (and capital gains), as its stores continue humming along… despite the news.

Avoid panic-selling by resisting the mainstream media’s distortion of popular news.

Wal-Mart is a great business. And it’s got the rock-solid fundamentals to prove it.

Good investing,