Walmart (WMT -0.04%) may not grab investor attention as a top growth stock, but it blew past the S&P 500, as well many other popular growth stocks.
Retail stocks in general are seeing improvement as inflation moderates, and 2025 could be another great year for Walmart, the largest retailer in the world. Here are three reasons why investors should consider buying it now.
1. People are spending again
As inflation heads back into more normal territory and interest rates go down, consumer spending could start to pick up. There are several reasons why Walmart can get a big chunk of that.
One is simply that it's the largest retailer in the U.S. by sales, and naturally, people shop in its stores. It has more than 4,600 stores in the country and nearly $674 million in trailing 12-month sales.
Another reason Walmart is poised to benefit is that it's a discount retailer targeting a mass audience. This is the population that has been most impacted by inflation, and as it eases, they can go back to spending more. If higher inflation persists, these customers will spend their dollars more carefully at discount retailers like Walmart.
Interest rates were cut in September, so the full effect has not yet been felt. The Federal Reserve most recently made it sound like the economy has been improving well enough, and it might not need to make further cuts in the near future. But if it does, that could be even more favorable for Walmart's business.
2. It's gaining in e-commerce
Walmart has the No. 2 spot in U.S. e-commerce, but that may sound better than the reality -- it accounts for around 6% of e-commerce sales, a fraction of Amazon's market share, which is around 38%.
However, Walmart's e-commerce business has been taking off lately, and it was responsible for much of the company's excellent third-quarter performance. Total sales increased 5.5% year over year in the 2025 fiscal third quarter (ended Oct. 31), and U.S. e-commerce sales increased 22%. What Walmart has as an advantage more than any other U.S. retailer is its unrivaled store count that it's been using as delivery hubs. This is also an edge vs. Amazon, which can't open 4,600 local distribution centers. Amazon has been feverishly restructuring its logistics network, first switching from a national to regional network specifically to compete with faster delivery, and now it's working on its inbound network to get products to its regional fulfillment centers faster. Walmart already has that in place. Another edge Walmart has vs. Amazon with this model is that it offer in-store pickup.
E-commerce plays other roles in creating new opportunities for Walmart. It offers greater merchandise variation on the digital platform, including more expensive items than it features in many of its stores, and providing it with more exposure to a more affluent clientele. That's another market that Walmart hasn't serviced in a big way int he past but can promote higher sales.
Whether or not higher inflation persists, e-commerce can add more sales to the whole in 2025.
3. Don't forget the dividend
Walmart pays a growing dividend that adds value for any kind of investor. Because dividend yield and price move conversely, Walmart's dividend yields a low 0.9%. Historically, it's usually been around 1.5%.
Dividend stocks are an important component of any portfolio because they're usually steady under pressure. No matter what happens to stocks, outside of catastrophes like global pandemics, they pay out. So whatever happens to Walmart stock this year, the dividend should come through. And investors should note that even during the pandemic, when some companies did suspend their dividends, Walmart didn't.
Like any great stock, you should buy Walmart for its long-term opportunities and stability, not just what it could in 2025. It could beat the S&P 500 again this year, but its greater value lies in its strength as a retail giant.
