Wal-Mart Stores

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There isn't much that's exciting about Wal-Mart Stores ( WMT). At $470 billion in annual sales, the firm is more of an immovable object than a nimble retail name.

But don't tell that to investors. Even if the firm's business isn't exciting, its price action has been. Shares of WMT have climbed 14% higher since the first trading day in January; that's an annualized 56% excluding the firm's 2.4% dividend payout. This coming quarter, the Bentonville, Ark.-based firm looks primed for a dividend hike.

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Wal-Mart is the biggest retailer in the world. On top of its massive sales numbers, the company boasts close to 10,000 store locations spread across the globe, and size bears some pretty serious price advantages for WMT. The firm is aggressive when it negotiates with suppliers, and its built a reputation for winning price concessions that suppliers are willing to put up with in exchange for volume. Those low wholesale prices don't lead to bigger margins for Wal-Mart, though - they get passed down to customers to keep WMT's low-price promise. That ability to keep costs low gives Wal-Mart an economic moat.

While WMT's margins are pretty typical for a big-box retailer, the firm makes up for thin profits by piling on a lot of them. Conventional margins on massive sales led to free cash generation of around $55 billion last year, a number that bodes well for Wal-Mart shareholders. All of that cash generation makes a dividend hike look likely. The firm has held its 47-cent payout constant for the last four quarters, but I'd expect to see a dividend boost in the next quarter.

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