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Somebody knows something


Share’s of Walmart hit a 52-week and multi-year high this week of $62.63 – a level not touched since the fall of 2008 – which left investors happy as well as curious.

Walmart shares have been on an upward trend since last September when they traded below $50. The company gained some momentum after reporting a positive same-store sales increase at its U.S. business in the third quarter and then suggesting fourth-quarter results would also be positive. Those figures won’t be available until results are reported on Feb. 21, but increased investor interest in Walmart shares would seem to suggest expectations have become elevated for the company to report a solid increase as other retailers who report results monthly showed some strength.

If that proves to be the case for Walmart, investors could be in for another treat around early March when Walmart typically makes an announcement about its dividend. The company has already telegraphed that it is committed to further increasing the dividend from the current annual payout of $1.46 so it is a matter of how generous the board feels toward returning cash to shareholders. Walmart has plenty of cash now that it is spending less building stores, so the potential exists for a hefty increase from what is already one of the richest dividends in retail. Last year the dividend was increased by 21% to $1.46 from $1.21. If, and it’s a big if, a similar percentage increase is in the cards this year it would put the annual dividend at a substantial $1.76. If the board went with a smaller increase along the lines of the 11% increased approved in 2010 when the annual dividend went to $1.21 from $1.09 it would push the 2012 annual payout to $1.62 from the current $1.46.

Shares of Walmart suddenly look more appealing when investors factor in the prospect of a healthy dividend increase and sales momentum at U.S. stores that would enable the company to leverage expenses and drive increased profitability. At least that’s one theory behind the movement in Walmart shares.

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