Wal-Mart Stores, Inc. (WMT) vs. The Procter & Gamble Company (PG): Which Dow Jones Industrial Average (.DJI) Stock’s Dividend Dominates?

Round four: strength
A stock’s yield can stay high without much effort if its share price doesn’t budge, so let’s take a look at the growth in payouts over the past five years. If you bought in several years ago and the company’s grown its payout substantially, your real yield is likely look much better than what’s shown above.

WMT Dividend data by YCharts

Winner: Wal-Mart, 1-3.

Round five: flexibility
A company — even one as well positioned as these — needs to manage its cash wisely to ensure that there’s enough available for tough times. Paying out too much of its free cash flow in dividends could be a warning sign that the dividend is at risk, particularly if business weakens. This next metric analyzes just how much of their free cash flows our two companies have paid out in dividends over the past five years:

WMT Cash Div. Payout Ratio TTM data by YCharts

Winner: Wal-Mart, 2-3.

Despite a late-game surge, Wal-Mart Stores, Inc. (NYSE:WMT)’s strengths in dividend increases and payout wiggle room weren’t enough to overcome The Procter & Gamble Company (NYSE:PG)’s long history of rewarding shareholders. Is P&G truly the best dividend stock of the two, or is Wal-Mart destined to surpass its supplier to become the better investment going forward?

The article Wal-Mart vs. Procter & Gamble: Which Dow Stock’s Dividend Dominates? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble.

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