Walmart’s (WMT) stock performance this year has been relatively modest, without any significant gains grabbing headlines. Moreover, concerns have surfaced about consumer spending, especially as tariffs begin to impact pricing, adding pressure to the retail sector and Walmart’s shares.

Despite the potential risks associated with tariffs, Walmart stock remains a compelling investment option, offering stability, growth, and income. The company has made efforts to navigate the challenging retail environment and reshaped its business model to be more profitable. By expanding into higher-margin areas, such as advertising and membership programs, Walmart has broadened its revenue streams in ways that support stronger profit growth, even if sales rise more slowly.

At the same time, Walmart continues to strengthen its presence in e-commerce. Its competitive pricing, fast delivery, and emphasis on convenience resonate well with consumers. These strategic moves protect the company against economic headwinds and position it well to return higher cash to its shareholders.

Walmart to Deliver Strong Earnings as Digital Strategy Pays Off

Walmart’s focus on diversifying its income sources beyond traditional store sales, with e-commerce, advertising, and membership programs, is now playing a bigger role than ever. These high-margin areas are helping Walmart grow its bottom line faster than its revenue, positioning it well to weather external pressures, such as potential cost increases from tariffs.

Walmart’s e-commerce operations turned profitable in the first quarter of the current fiscal year. The retailer’s focus on improving the efficiency of its delivery networks, particularly for last-mile logistics, is helping improve the unit economics. As Walmart densifies its delivery routes and customers increasingly opt for faster delivery options, costs are decreasing, and margins are improving.

Walmart's advertising business, which continues to expand rapidly, is a significant growth catalyst. Advertising revenue increased by 50% across all markets, including the integration of VIZIO. In the U.S., Walmart Connect, the retailer’s leading ad platform, posted a 31% year-over-year increase. Meanwhile, Sam’s Club’s ad sales rose 21%, and international advertising, led by India’s Flipkart, surged 20%.

Membership income is another bright spot. Across the enterprise, it rose nearly 15%. In the U.S., Sam’s Club saw a 9.6% increase thanks to steady growth in member counts, high renewal rates, and a rising number of Plus members. Walmart+ also delivered double-digit growth. Internationally, Sam’s Club China reported a staggering 40%-plus rise in membership income as more customers joined the fold.

These developments are setting Walmart up to deliver robust earnings growth. While the company’s profitability improves through higher-margin streams, its revenue is also gaining traction. The strong momentum in its e-commerce business, led by pickup, delivery, and third-party marketplace sales, will support future revenue growth. Delivery speed is proving to be a competitive advantage, and Walmart now offers delivery within three hours to 95% of the U.S. population. Internationally, same-day or next-day deliveries increased by 35%, with 45% reaching customers within three hours or less.

With Walmart’s evolving business model built on e-commerce, strong logistics, digital advertising, and loyal membership programs, the retailer is well-positioned to deliver strong earnings growth.

Walmart Is a Dependable Dividend Stock

Walmart is also known for its resilient and growing dividend distributions. In February, the company raised its annual dividend by 13%, bringing it to $0.94 per share. The recent hike marked the 52nd consecutive year that Walmart has grown its dividend.

Walmart’s impressive dividend growth streak reflects its ability to expand its earnings.

Conclusion: Walmart Stock Is a Compelling Investment

While Walmart’s stock may not be making headlines with explosive gains, its long-term investment case remains strong, with its digital businesses yielding tangible results. The company’s pivot toward high-margin businesses, such as e-commerce, advertising, and memberships, is driving profitability and future-proofing its operations against economic headwinds, including tariffs and fluctuating consumer demand.

Furthermore, Walmart’s dependable dividend growth, supported by solid earnings and over five decades of increases, adds to its appeal as a reliable income-generating stock.

Wall Street analysts are bullish and maintain a “Strong Buy” consensus rating on WMT stock.