7 Reasons to Buy Walmart Stock Like There's No Tomorrow

Walmart (NYSE: WMT), one of the largest retailers in the world, has been a reliable stock for long-term investors. Over the past 10 years, it has gained nearly 270% as the broad market S&P 500 index advanced by about 160%. Factoring in reinvested dividends, Walmart's total return was 340% against the S&P 500's total return of 205%. Here are seven reasons it's still worth buying with both hands today.

Image source: Getty Images.

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1. Its consistent comps growth

Walmart's comparable-store sales metric, which gauges the year-over-year growth of stores that have been open for at least 12 months (plus its e-commerce sales), has consistently risen over the past decade. It achieved that sales growth by renovating its stores, rolling out more private label brands, matching Amazon's prices, expanding its e-commerce and digital capabilities, and leveraging its massive network of brick-and-mortar stores to fulfill online orders.

Its Sam's Club chain also grew at a healthy rate, keeping pace with rival Costco (NASDAQ: COST) in the membership-driven warehouse club market. Walmart's international growth slowed down in fiscal 2022 and fiscal 2023 (which ended in January 2023) as it divested some of its weaker overseas businesses, but that streamlined segment flourished over the following two years.

Data source: Walmart. Comps growth excludes fuel sales.

Walmart's growth over the past five years shows how resistant it was to inflation, geopolitical conflicts, and other disruptive macro headwinds. For its fiscal 2026 (now underway), it expects its net sales to grow by 3% to 4% on a constant-currency basis.

2. Its stable brick-and-mortar expansion

The total number of Walmart stores worldwide declined from 11,501 at the end of fiscal 2020 to 10,593 at the end of fiscal 2022. However, a large portion of that decline was caused by its overseas divestments.

It has been expanding its footprint steadily since then, and it ended fiscal 2025 with 10,711 physical locations. That stable pace of expansion should help it widen its moat and maintain its lead against its smaller retail competitors.

3. Its gross and operating margins are resilient

Walmart's scale enables it to maintain higher gross and operating margins than many other retailers. While surging inflation squeezed its gross and operating margins in 2022 and the first half of 2023, both figures bounced back in the second half of 2023 and 2024 as those headwinds diminished.

Source: YCharts.

4. It's resistant to tariffs

Those resilient margins suggest that it will be able to resist the impact of President Donald Trump's unpredictable tariffs, even though most of the products it sells are manufactured in China and other Asian countries. Walmart should be better positioned to convince its overseas suppliers to pre-deliver more products to the U.S. warehouses before the larger portion of Trump's tariffs kick back in, leverage its scale to negotiate better prices for its future shipments, have its suppliers absorb some of those higher costs, or pass the costs of tariffs onto consumers by raising its prices. The last solution would certainly be the least preferable for its customers -- but the chain could still sell its products at lower prices than its competitors.

5. It's a Dividend King

Walmart's forward dividend yield of 1% might seem paltry, but it has raised its dividend annually for 52 consecutive years, earning it the title of Dividend King. It also spent just 52% of its free cash flow on its dividend payments over the past 12 months, so it has plenty of capacity to make future hikes.

6. It's still buying back its own shares

Walmart bought back 6% of its outstanding shares over the past five years, 17% of its shares over the past decade, and 36% of its shares over the past 20 years. Its consistent stock buyback policy, combined with its regular dividend hikes, indicates that it's committed to returning a lot of its free cash flow to its investors.

7. It deserves its premium valuations

From fiscal 2025 through fiscal 2028, analysts on average expect its revenue to grow at a compound annual rate of 4% as its EPS increases at a compound annual rate of 11%. Investors should take those estimates with a grain of salt, but they do suggest that Walmart can continue to grow regardless of Trump's tariffs and his escalating trade war, sticky inflation, and other macroeconomic challenges.

That's why Walmart's forward price-to-earnings ratio of 36 doesn't seem too expensive. Costco, which also has plenty of evergreen advantages, trades at 54 times forward earnings. Walmart's stock isn't cheap, but the company's resilience in this rough market justifies its valuation multiple. That's probably why it's still up 6% year to date even as the S&P 500 is down by 7%. Investors who buy the stock today should be well rewarded over the next few years.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.