Walmart faces stock split on August 20 amid dividend growth

Walmart’s stock is in focus ahead of its second-quarter earnings report on August 20, with one big reason to buy and one reason to hold off.

The case for buying is strong. Walmart has raised its dividend for 50 straight years, offering a modest but growing yield of 0.9%. That payout has climbed about 6% annually over the past five years, matching the S&P 500’s recent yield. Shares have also delivered impressive returns, averaging 17% annually over the past decade and 14% over 15 years, despite its massive $890 billion market cap. In its last quarter, revenue rose 7.3% and operating income climbed 5%, while e-commerce surged 26% and membership fees grew 17%. The company is also adapting to shifting consumer habits with fast grocery delivery and in-store pickup options. During economic downturns, Walmart tends to outperform as shoppers prioritize affordability, making it a relatively stable investment.

But there’s a catch: Walmart’s stock looks expensive right now. Its price-to-sales ratio sits at 1.24, well above its five-year average of 0.83. The forward price-to-earnings ratio is 38, also higher than the five-year average of 27. While long-term investors might still benefit, the stock appears overvalued in the near term. Analysts at The Motley Fool Stock Advisor recently highlighted 10 stocks they believe could deliver outsized returns, and Walmart wasn’t among them—despite past picks like Netflix and Nvidia delivering massive gains for early investors.

Investors weighing Walmart should consider whether they’re comfortable paying a premium for stability and growth. The company’s ability to thrive in tough economic times and expand its e-commerce presence makes it a defensive play. However, with shares trading at elevated levels, waiting for a pullback could reduce risk. The earnings report on August 20 could be a catalyst—strong results might justify the current valuation, while weak figures could push the stock lower. For those already holding Walmart, the dividend and long-term growth story remain compelling. But for newcomers, patience may be the smarter move until the price becomes more attractive.