We recently published a list of List of Dividend Aristocrats in the S&P 500: Sorted by hedge fund sentimentIn this article, we take a look at how Walmart Inc. (NYSE:WMT) compares to the other Dividend Aristocrats of the S&P 500.
The appeal of dividend growth stocks is unmatched. For those looking to invest in dividend stocks, growth usually outweighs yield because they have produced consistent returns over the years. Dividend growth strategies are where Dividend Aristocrats stand out. Of the roughly 6,000 stocks listed on the NYSE and NASDAQ, only 67 companies deserve the title of Dividend Aristocrats. These companies have consistently increased their dividend payouts for at least 25 years in a row. They are part of the broader market and are tracked by the Dividend Aristocrat Index.
Also read: The 10 best dividend paying stocks under $50
Companies that regularly increase their dividends tend to demonstrate strong financial health and stability, indicating their consistent profitability. A report from Fortune highlighted that the Dividend Aristocrat Index, despite lagging its benchmark, has outperformed nearly all active U.S. managers over the past decade. Rupert Watts, head of factors and dividend indexes at S&P Dow Jones Indices, discussed dividend growth strategies with the global media organization. Here’s what the analyst said:
“Increasing dividends for more than 25 years is no easy task. These are high-quality companies.”
Dividend Aristocrats have produced impressive returns and outperformed other asset classes. Since the index’s inception in 2005 through September 2023, the Dividend Aristocrats Index has produced a total return of 10.35%, outperforming the broader market’s return of 9.54% for the same period. These stocks are celebrated not only for their dividend growth and steady price gains, but also for their lower volatility. During this period, Dividend Aristocrats had a volatility of 15.35%, compared to the market’s slightly higher 16.31%. This suggests that Dividend Aristocrats tend to have more stable price movements. Their consistent dividend increases over 25 years or more demonstrate their ability to reward shareholders even during difficult times, such as the 2007 financial crisis and the 2020 pandemic.
The debate between high yields and dividend growth continues. As of August 19, the High Dividend ETF, which tracks high-yielding companies in the broader market, offers a dividend yield of 4.18%. This yield would have been quite attractive to investors in the past. However, this year the ETF has only returned 4.8%, compared to the market return of 18%. According to FactSet, investors have withdrawn over $1.1 billion from the fund, representing more than 15% of its $6 billion in assets. This suggests that investors prefer dividend growth over high yields, as high yields are often viewed as a sign of financial trouble. In this article, we take a look at some of the best Dividend Aristocrat stocks according to hedge funds.
Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (Further details can be found here).
A manager stands in a hypermarket and points to items available for wholesale sale.
Walmart Inc. (NYSE:WMT)
Number of hedge fund owners: 95
Walmart Inc. (NYSE:WMT) is an American retail conglomerate that operates a chain of hypermarkets, discount stores, and grocery stores in the United States. The stock is outperforming the broader market this year, returning shareholders 38%, thanks to a growing number of customers visiting the company’s stores and making greater use of its online shopping platforms. In its second-quarter 2025 earnings, the company reported higher e-commerce penetration across all segments. Its global e-commerce sales increased 21% compared to the same period last year. Consolidated revenue for the quarter was $168 billion, up 4.8% from the same period last year.
From a dividend perspective, Walmart Inc. (NYSE:WMT) is a reliable choice due to its strong balance sheet. The company ended the quarter with $8.8 billion in cash and cash equivalents. It generated operating cash flow of $16.4 billion and its free cash flow was $5.9 billion. Year-to-date, the company has repurchased 33.4 million shares worth $2.1 billion. The company pays a quarterly dividend of $0.2075 per share and has a dividend yield of 1.13% as of August 19. WMT tops our list of top Dividend Aristocrats stocks because the company has increased its payouts for 51 consecutive years.
Insider Monkey’s database for Q2 2024 shows that 95 hedge funds held shares in Walmart Inc. (NYSE:WMT), a significant increase from 88 in the previous quarter. These shares have a total value of nearly $9.2 billion. With over 45.5 million shares, Fisher Asset Management was the company’s largest shareholder in Q2.
Total WMT 1st place on our list of S&P 500 Dividend Aristocrats. While we recognize WMT’s potential as an investment, we believe some highly undervalued dividend stocks promise higher returns, and in a shorter time frame. If you’re looking for a highly undervalued dividend stock that has more promise than WMT but trades at less than 7 times earnings and yields nearly 10%, read our report on the dirt cheap dividend stock.
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Disclosure: None. This article was originally published on Insider Monkey.
