As you approach the end of your working day, you will likely change your investment focus. After all, you were probably focused on building wealth, and now you need to change your outlook to preserve that amount of money and create income.
With this in mind, companies with strong market positions produce a lot of free movement of capital, and pay ever higher dividends meet these criteria. Let’s take a closer look at two companies that seem to fit the bill.
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Walmart
While the retail industry is notoriously fickle, leaving a lot out, Walmart(NYSE: WMT) has flourished over the past six decades. Serving more than 240 million customers per week, it has done well in controlling costs and passing those savings on to its customers through low prices.
Fortunately, management has not rested on its heels. Since launching its first e-commerce sites over two decades ago, it has continued to promote technology and omnichannel initiatives. A year ago, the company launched Walmart +, its subscription service that includes shipping, faster payment, and lower prices for gasoline.
This simple business – offering ultra low prices along with fast and convenient delivery options – produces a stupendous amount of free cash flow. For the first three quarters of this fiscal year, it generated $ 7.7 billion, which easily covered the $ 4.6 billion in dividends. That was for the period that ended on October 31st.
The dividend is also very important for Walmart. After declaring its first payment in 1974, the board of directors has subsequently increased the dividend every year since then. Already a Dividend Aristocrat, the company is on the way to becoming a King of dividends in a few years.
Microsoft
More Microsoft‘s (NASDAQ: MSFT) over 45 years of history, it has become well known for its Office and Windows products, as well as its Xbox gaming system. Professional networking company LinkedIn is also under his umbrella.
These products, as well as cloud computing and artificial intelligence, keep growing well. Far from being a mature, outdated company, its first-quarter tax revenue increased 22% to $ 45.3 billion. This period ended on September 30.
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Fortunately, Microsoft also generates a lot of free cash flow. Last year it generated over $ 56 billion, easily covering the $ 16.5 billion in dividends. While the company hasn’t built as impressive a dividend history as Walmart, it has increased its payouts every year since 2006.
Microsoft, with its strong position in the market and its look to the future, intends to remain at the forefront of technology for a long time.
At the end of your working day, you can celebrate this milestone. After that, you’ll want to review your investments to make sure they match your investment goals. You can be sure that Walmart and Microsoft, two dominant companies in their respective industries, will provide you with stability and income during your retirement years.
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Teresa Kersten, an employee of LinkedIn, a subsidiary of Microsoft, is a member of the board of directors of The Motley Fool. Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool owns stock and recommends Microsoft. The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner providing financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
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