Investors often gravitate toward super safe dividend stocks to collect passive income and limit market volatility. But sometimes, even stodgy, boring companies can crush the market.
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In the past six months (from May 29 to Nov. 29) Walmart (NYSE: WMT) is up a staggering 42.5%, Clorox (NYSE: CLX) is up 30.4%, and Kenvue (NYSE: KVUE) is up 27.6%. Here’s what’s driving all three stocks higher and why they have what it takes to continue raising their dividends for years to come.
With discount retailers like Dollar General and Dollar Tree hovering around 52-week lows and Target falling over 22% in a single day after its last earnings report, you may think that Walmart stock would be lying in the bargain bin. But Walmart is up a mind numbing 72% year to date.
When an established retailer like Walmart gains a big amount in a short period of time, it’s usually because the company is doing something completely unexpected. Walmart has threaded the seemingly impossible needle of conveying everyday value for consumers while also attracting higher-income consumers.
In its recent quarter, Walmart said that its U.S. business delivered 5.3% comparable sales growth with notable market share gains in grocery and general merchandise. For the quarter, around 75% of market share gains in Walmart U.S. came from households earning more than $100,000.
So by delivering everyday value, Walmart has attracted consumers toward its discretionary goods during a period when so many retailers are struggling. It’s not just pricing where Walmart is shining. Walmart’s services, such as Walmart+ contactless delivery service, Walmart Marketplace (business-to-business e-commerce tools), and Walmart Connect (tools for sellers) are all thriving.
To top it all off, Walmart is using artificial intelligence and machine learning to gain customer insights and improve the in-store experience, digital offerings, and its internal processes.
Walmart is in a league of its own, but the stock has become significantly more expensive, and the yield has fallen to just 1%. However, Walmart is a Dividend King with 51 consecutive years of dividend raises. In February, Walmart raised its dividend by 9%, and I would expect a double-digit-percentage raise this coming February.
Add it all up, and Walmart could still be worth a closer look for investors who don’t mind a lower yield.
With 40 consecutive years of dividend raises and a 2.9% yield, Clorox immediately stands out as a passive income powerhouse. But unlike Walmart, Clorox isn’t at the top of its game — far from it right now.
