3 Big-Box Stores Dividend Investors Can Count on in 2025

Key Points

• Among 2025's retail leaders, Walmart will sustain business growth and capital returns. 
• TJX Companies is well-positioned for the current environment; it buys back shares and pays a healthy dividend.
• Dick's Sporting Goods is a high-quality dividend-paying stock trading at a deep discount to its peers. 

Consumer habits have shifted, but spending remains strong, leaving big box stores like Walmart NYSE: WMT, TJX Companies NYSE: TJX, and Dick’s Sporting Goods NYSE: DKS in a solid position. Their dominating positions allow them to deliver value to consumers while gaining market share in a tepid retail environment. The takeaway is that these companies will sustain growth in 2025 and widen their margin, which is critical because cash flow and capital return are central to the investment thesis. These companies pay dividends and back significant quantities of shares, providing tailwinds for value that will likely strengthen as the year progresses. 

Walmart’s Everyday Low Prices Drive Value for Investors

Walmart and the retail sector won’t have the hottest growth in 2024, but they will sustain growth and widen their margins. Walmart is forecasted to grow its top line by nearly 5% due to international expansion and non-core businesses, including ads, and to grow earnings by twice that amount. Margin strength will tied to revenue leverage and cost controls, with the bottom line results compounded by share repurchases. Walmart isn’t an aggressive repurchaser but does offset dilution and share-based compensation, which is sufficient. The company repurchased $3 billion in the first three quarters of 2024 and will likely sustain that pace for the foreseeable future. 

Walmart’s dividend isn’t a high yield or comparable to the S&P 500 at 1%, but it is among the most reliable. The company’s balance sheet carries debt but is well-managed, leaving ample cash flow for annual increases and share buybacks. The company is a Dividend King with over 50 years of consecutive annual increases and still pays less than 35% of earnings. 

Analysts' trends support the uptrend in WMT’s stock price. The group has steadily lifted the consensus rating and price target throughout 2024, pointing to a new all-time high for the stock. The consensus target aligns with the recently set all-time high, but the freshest revisions are much higher and suggest a 25% upside from 2024’s closing price. 

The TJX Companies Gives Them What They Want

Consumers haven’t given up on discretionary items, including fashion and home goods, but they are price-conscious, a trend for which TJX Companies is well-positioned. It is sustaining growth in alignment with industry trends due to strength driven by volume sales and traffic in all banners, not higher prices. The critical detail is that margin strength is also present, aided by cost control and industry trends.

The inventory surge following the COVID-19 pandemic and subsequent supply chain issues hurt many full-price retail apparel businesses but not TJX Companies. TJX Companies, an off-price merchant, now has ample merchandise options, allowing it to focus on brands and items consumers want and pay prices that it likes. 

The company's cash flow is why higher share prices are expected in 2025. It allows TJX Companies to maintain a healthy balance sheet while returning capital and increasing distributions annually. The balance sheet and capital return highlights include increasing cash in F2025 despite buybacks, dividends, and an inventory increase. Other highlights include increased total assets only partially offset by increased liability. Debt is relatively flat, and equity is rising, up nearly 20% YTD.

Regarding capital return, repurchases benefit shareholders, reducing the count by nearly 1.5% for the quarter. The dividend distribution increases annually. The dividend is attractive at a 1.35% yield and only 35% of the earnings, growing at a double-digit CAGR in recent years. 

Dick’s Sporting Goods Scores Big for Investors

Dick’s management had worked hard since before the pandemic began to establish the company as a leading omnichannel sporting goods retailer; the social-distancing boost was a game-changing boost that established it as the leading sporting goods retailer. Now, Dick’s is sustaining growth, margin, cash flow, and healthy capital returns. 

Dick’s Sporting Goods revenue and earnings are expected to grow mid-single-digit in 2025, but the outlook is likely low because of the strong comps and market share gains in 2024. 

Dick’s Sporting Goods is a quality dividend-growing stock aggressively increasing its distribution at a high-double-digit CAGR. The distribution growth pace is supported by earnings growth and backed up by a healthy balance sheet, so it is sustainable and capable of supporting higher stock prices. The capital return includes the dividend, which yields nearly 2%, with shares near record levels and buybacks. Buybacks reduced the count by 1.80% on average in FQ3 and are expected to continue at a count-reducing pace in calendar 2025.