Earn In Pesos With Wal-Mart De Mexico

Here’s a stock that routinely delivers market-beating returns, yet has a 10-year average annual total return of just 5.50%.

How’s that possible?

Because, despite being a blue chip business backed by one of the largest and most powerful parent companies in the world, today’s stock is extremely susceptible to bad news. Or more specifically, it’s share price is.

Wal-Mart De Mexico S.A.B. de C.V. ADR ($WMMVY) is Walmart’s publicly traded subsidiary that operates retail stores in Mexico and Central America.

The company operates Walmart, Walmart Express, Bodega Aurrera, Mas x Menos, and Sam’s Club stores throughout Mexico, Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica.

Mexico and Central America are fairly stable regions that get a bad rap due to organized crime and illegal immigration.

Also, Mexico and Central America aren’t high-growth economies.

And these two factors make regional stocks fairly cheap.

As a result, Mexico offers a lot of great investment opportunities. Many Mexican stocks have high starting dividend yields and offer good growth opportunities, if bought at the right price.

Wal-Mart De Mexico is a great example.

Like its parent company, Walmart ($WMT), Wal-Mart De Mexico operates big-box retailers that sell everything from fruit and toothpaste, to computers and flat screen TVs. Wal-Mart De Mexico has been in business since 1958, and the company has paid dividends every year for over 20 years.

Right now, Wal-Mart De Mexico is paying a 3.48% starting dividend yield with a 5-year compound annual dividend growth rate of 4.66%, and the firm trades at a price to earnings ratio of 19.14.

Meanwhile. parent company, Walmart has a starting dividend yield of just 0.94%, a 5-year compound annual dividend growth rate of 4.95%, and a price to earnings ratio of 38.57.

Wal-Mart De Mexico is a much cheaper stock.

Additionally, Wal-Mart De Mexico offers strong capital appreciation potential if you buy at the right price.

After Trump won the election, Wal-Mart De Mexico sold-off hard. The stock sank to just over $25 per share. Since then, Wal-Mart De Mexico has gained +20.40% without including dividends.

The S&P 500 is up +9.04% in this same timespan.

Earlier this year, Wal-Mart De Mexico tumbled back into the $25 range due to fears about tariffs, only for shares to rebound and rocket past the $34 mark.

At it’s current share price of $30.51, I wouldn’t rush out to buy Wal-Mart De Mexico stock.

But, I would keep an eye on this business. Because if shares fall back into the $25 range, Wal-Mart De Mexico could be a great income investment that also provides double-digit capital appreciation from once it rebounds.

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.