Walmart (WMT) stock has long been a dividend favorite, but the retail giant’s international operations are quietly setting the stage for a key acceleration in shareholder payouts.
The numbers from overseas tell a story most investors aren’t paying close enough attention to.
Walmart International drove the company’s strongest performance in the third quarter, posting sales growth of 11.4% in constant currency while adjusted operating income jumped 16.9%.
For context, that’s nearly double the growth rate of Walmart’s U.S. operations. More importantly, it signals a fundamental shift in how international markets contribute to the company’s bottom line.
“We continue to benefit from business mix changes and lower losses in e-commerce,” CEO Doug McMillon shared during the company’s recent earnings call, referring specifically to international operations.
Walmart is bullish on international sales, driven by expansion in China and India, including Flipkart and PhonePe.Getty Images Michael M. Santiago ·Getty Images Michael M. Santiago
Walmart’s China business hit a remarkable milestone that few U.S. retailers have matched.
McMillon visited three Chinese cities in October, including Hefei, a city of about 10 million people. The company now operates 60 Sam’s Club locations across China, with a healthy pipeline of new clubs.
What makes China valuable isn’t just the sales growth. The market serves as a testing ground for innovations that eventually make their way to other regions.
Dark-store formats, ultra-fast delivery, and digital-first shopping experiences are all refined in China before rolling out globally.
Both businesses hold the largest market share in their respective categories, and they’re network businesses that become more valuable with each additional user.
Kathryn McLay, who leads Walmart International, highlighted the transformation happening across markets during the earnings call, “We continue to feel really strong about the top-line trajectory that we have in International. And it’s a mix of being in high-growth markets, like India and China, as well as really truly maturing our omni playbook in other markets like Mexico and Canada and Chile.”
Here’s what matters most for dividend investors. International operations are moving from being a drag on earnings to becoming a significant profit contributor.
The retail heavyweight no longer breaks out specific losses by market, but management has been clear that international e-commerce losses have declined substantially. In markets like China and Mexico, e-commerce is already profitable.
As these operations scale and move into the black, they provide incremental earnings that don’t require proportional capital investment.
According to data from Tikr.com, between fiscal 2025 and fiscal 2030, analysts forecast Walmart’s:
Free cash flow to expand from $12.66 billion to $33.41 billion.
Annual dividends to rise from $0.83 per share to $1.13 per share.
It means Walmart’s payout ratio will improve from 52% in fiscal 2025 to 27% in 2030. A narrowing payout ratio will enable Walmart to invest in growth projects globally and gain traction in other international markets.
CFOJohn David Rainey made this point explicitly during a recent conference:
“The U.S. business is such a large business that it commands so much focus and attention. But we shouldn’t lose sight of the opportunity internationally, particularly as we talk about our e-commerce journey and the profitability journey because part of that journey is just going from loss-making in some of these regions and entities to beginning to have a profit, and that bends that curve as well.”
Walmart’s international advertising business grew 34% in the most recent quarter, led by Flipkart. This matters because advertising revenue requires minimal incremental capital and flows directly to the bottom line, with margins much higher than in traditional retail.
In China, membership income jumped 34%, driven primarily by Sam’s Club. These high-margin revenue streams are growing faster than core retail sales, improving the overall profit mix of international operations.
The combination of growing membership fees, advertising revenue, and improving e-commerce economics creates a powerful earnings tailwind. As these businesses scale, they generate cash flow that supports higher dividend payouts.
Walmart has increased its dividend for 52 consecutive years, earning it Dividend Aristocrat status. The company returned nearly $13 billion to shareholders through dividends and buybacks in the first nine months of fiscal 2026.
But the dividend payout ratio remains conservative, giving Walmart substantial room to increase distributions as earnings grow.
With international operations transitioning from headwind to tailwind, the company’s earnings trajectory looks increasingly favorable.
Management has been clear that capital allocation priorities remain consistent. Invest in the business first, maintain the dividend, and return excess cash through buybacks. As international profitability improves, that “excess cash” number should grow meaningfully.
The company’s stock listing is moving to NASDAQ, a symbolic shift that Rainey explained reflects “the people-led tech-powered approach of our long-term strategy.” But the real story isn’t where the stock trades. It’s how international digital commerce, powered by markets like China and India, is reshaping Walmart’s earnings power.
For dividend investors, the message is clear. Walmart’s international transformation is about unlocking a new earnings stream that could fuel dividend increases well above the company’s historical pace.
The foundation is being laid now, and the payoff should follow in the quarters ahead.
