From a modest start as a retail discount store in Arkansas in 1962, Wal-Mart grew in less than 40 years to top the Fortune 500 list in 2001. Of equal importance to investors is that Wal-Mart has continued its growth, moving into new markets in countries like China and expanding the scope of its products. For investors with limited funds or seeking to keep transaction fees low, Wal-Mart offers direct-stock purchase plans. This article explains how Wal-Mart direct-stock purchase plans work. Links under resources provide more information.
Identification
Wal-Mart is primarily a discount retail chain headquartered in Bentonville, Ark. In addition to its famous retail "Supercenter" stores, Wal-Mart offers banking services and owns the Sam's Club chain of discount warehouse retail stores. It operates on a global basis and, as of 2007, 20 percent of its revenue came from the Wal-Mart International subsidiary. Wal-Mart is a NYSE-listed company with the stock symbol WMT.
Size
As of 2008, Wal-Mart operated approximately 5700 stores, including its Sam's Club and Supercenter outlets, and employed more than 2 million people. Revenues for 2007 were $387.7 billion. Net income was $12.731 billion on gross-operating income of $21.996 billion. The company had assets of $183.5 billion and a shareholder equity of $64.6 billion. Wal-Mart has been ranked as America's largest corporation by Fortune every year since 2001, except for 2006.
Function
Deciding if a Wal-Mart DSPP account is right for you involves several factors. The plan offers low minimum investments and fees for purchasing stock. It is designed for the long-term investor. If your stock-trading strategy involves buying and selling stocks on a short-term basis, the DSPP probably isn't a good choice, as fees for stock sales are high for small amounts of stock, and you can only use the account for Wal-Mart stock. For long-term investors, Wal-Mart offers the option of setting the account up as a traditional IRA, Roth IRA or Coverdell Educational Savings Account. All offer substantial tax advantages.
Features
The minimum initial investment in Wal-Mart direct stock purchase plans is $250 ($50 for existing shareholders). You can satisfy the minimum investment by making contributions of $25 each month for at least 10 months. There is a set-up fee of $20. With automatic debits from a bank account, each transaction costs $1, or $5 if by check or other means, plus 5 cents per share. Sale of stock is more expensive, with each transaction costing $20 to $30, plus 5 cents per share. The maximum annual investment is $150,000.
Considerations
Check out the status of Wal-Mart by reading its annual report. Read the DSPP prospectus, which are available online. You can contact Computershare, Inc., the Wal-Mart transfer agent that administers their DSPP, by calling 1-800-438-6278.
Tags: purchase plans, Wal-Mart offers, cents share, direct-stock purchase, direct-stock purchase plans, each transaction, income billion