Top Picks 2016: Wal-Mart Stores

01/18/2016 7:00 am EST


Charles Carlson

Editor, DRIP Investor

Our top conservative idea for 2016 has been the Dow's worst performer over the last 12 months, falling 30%, explains Chuck Carlson, dividend expert and editor of The DRIP Investor.

Sluggish sales at Wal-Mart (WMT), along with slumping profits, rising labor costs, and increased competition for retail dollars from online retailers have hindered the company.

Are any of these things likely to change in 2016? Probably not. But given the stock's decline and the utter lack of interest in these shares, the bar has been set very low for the company.

Said differently, Wal-Mart is set up to beat the very low expectations investors now have and that is the sort of thing that can help jump-start a beaten-down stock.

The yield of 3.3% provides some compensation while waiting for the shares to rebound and the dividend is well covered by profits.

Again, I'm not a big long-term bull on Wal-Mart and I'm not sure if Wal-Mart can pull a worst to first in 2016. But I am confident that these shares will beat the market over the next 12 months.

Wal-Mart has a direct-purchase plan. Minimum initial investment is $250, but the firm will waive the minimum if an investor agrees to automatic monthly investment of at least $25 for ten months.

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