It’s the subject of documentaries, lawsuits, awe and the world’s largest employer. It’s blue and white, and other than a change to its famous logo just a few years ago, it’s still every bit of the gigantic all-in-one store its customers have come to expect. It’s size, though, extends well beyond the blueprints of each new store and into the pocketbooks of the family that inherited the corporate giant.
According to recent data, the Walton’s own some 1.71 billion shares of Wal-Mart stock in a trust known as the Helen R. Walton Family Group, named after Sam Walton’s wife, the founder of Wal-Mart. \
In total, the trust holds 47.88% of all Wal-Mart shares outstanding, worth roughly $92 billion at present market value. These shares are the sole reason why the Walton Clan owns the quite a position of the Forbes 400 list, with each son and daughter having huge stores of inherited wealth. It is actually Christie Walton, the widow of a Walton son, who is the wealthiest of them all. She’s also the richest woman in the world.
But it appears that more upside is in store for the royal family of retail. Following aggressive expansion around the globe, Wal-Mart’s acquisition-driven takeover of international retail has yet to be rewarded by shareholders. In fact, ten years ago Wal-Mart traded for $50 per share, exactly where it rests today. So, where Wal-Mart may be a better value today than the post-2000 tech bust, investors still haven’t given it the respect it deserves.
Its massive size, though often the reason most people see it to be so dangerous, is just one of the many things that hold the company down. Where smaller firms find avenues for growth even in recession, Wal-Mart’s equity position in consumer spending means its revenues are tied to the mercury in the thermometer for economic growth. It’s fighting the trend with smaller stores, but results are slow to surface.
Knowing that future weakness is virtually guaranteed for a retailer of its size, the company has little room to build shareholder value without 1) buying back itself or 2) maximizing market value by increasing dividend yields. At least partially driven by the Waltons, who have enough shares combined to stymie any potential activist investor, the company recently declared an increased dividend to $1.46 per share, with the first disbursements going out April 4th.
While Wal-Mart stock hasn’t offered any appreciation for eleven years running, the Walton’s are sure to strike it rich in the next eleven years. With annual dividends of $1.46 per share, WMT will return $2.5 billion in wealth to the Walton’s through its aggressive dividend increase this year alone, and given it’s policy for dividend growth, the family will see their wealth grow by $30 billion even if the stock price stagnates for another eleven years.
Just for fun, the Waltons will bring in $2.5 billion in dividend income in 2011. That works out to…
- $208 million per month
- $48 million per week (52 weeks to a year)
- $6.8 million per day
- $285,388 per hour
- $4,756 per minute
- $79.27 per second
Sure is tough being a Walton!
The rejection of the brand abroad of a very much “American” business model, Wal-Mart has a growth policy that is acquisition-exclusive. But at what point does Wal-Mart continue forth with its dividend schedule before finding the shareholder wealth may be best returned by stock buy-backs? Following a buy-back, the Walton’s would quickly rise to >50% ownership, and at that point I forecast Wal-Mart becomes a very basic Retailing Trust. Future model: money in, 90% out, slow growth, marginable reinvestment in the business, and the Walton’s walk away as the highest-dividend income family in the world. (They probably already are!)
Walmart does have a minor competitive advantage in making money with subsidiary Walmart real estate.
P.S. for the liberals: The Walton’s will pay only 15% on their dividend income.
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