How Retail Associates at Walmart can Participate in the Companies Stock Purchase Program.
Believe it or not, there are perks to working a retail job at Walmart Canada. Whether it’s part-time or full-time, all associates are offered the same generous merchandise discounts (Side Note: Associates receive a 20% discount on all merchandise, excluding clearance items) and investment products, that if used to their full advantage can help kickstart your retirement portfolio or help you maximize your earnings.
One perk that often gets overlooked by newly hired associates is Walmart Canada’s Associate Stock Purchase Program (ASPP for short). In essence, the program allows any associate (even new hires) to directly benefit from Walmart’s financial success through the purchase of Walmart Stock at a discounted rate through automatic payroll deductions.
It is important to note that the ASPP differs from a typical Employee Stock Purchase Program, in the sense that there is no vesting period. Once the shares have been purchased, associates are able to immediately sell without a holding period. Dividends are also fully reinvested.
For every dollar that you contribute through payroll deductions, Walmart will contribute an extra 15¢ to the purchase of Walmart Shares, up to $270 per year. To take full advantage of this program, your payroll deductions must equal $1800 annually which works out to ~$70 biweekly.
There are several fees to be wary of, most importantly the $25.50 plus $0.05 per share for each sale. It’s also important to note that if you ever choose to leave Walmart a yearly ComputerShare broker $35 annual fee is instated until you either sell or transfer all of your shares.
Let's Run Through Some Scenarios
All data was compiled on October 18, 2021
- Let’s say you deduct $1800 off your first paycheque and decide to sell immediately.
You’d receive ($1800 CAD + $270 CAD = $2070 CAD) $1,677.00 USD of Walmart Stock, which at today’s price of $141.68 USD would yield you ~11.83 Shares.
You’d pay ($25.50 USD plus $0.05 USD* 12 Shares) $26.10 USD for the sale transaction.
Overall, you’d walk away with $2037.78 CAD. Which is an easy $237.78 CAD.
2. Let’s sat you deduct $70 biweekly all year and decide to sell at year end.
You’d receive ($70 CAD + [0.15 * $70 CAD] → $10.5 CAD = $80.5 CAD) $65.22USD of Walmart Stock, which at today’s price of $141.68 USD would yield you ~0.46 Shares biweekly. By the end of the year (not accounting for Dividend Reinvestments) you’d be left with ~11.83 Shares.
Now for simplicity sake, as per 1stock1 the average yearly return of Walmart’s Stock for 2020 was 21.30%.
Factoring in the stock price increase of 21.30% over the year you held your ~11.8 Shares, they’d be worth approximately $2471.827 CAD when you decided to sell them. Which is an easy $671.82 CAD.
***Now it’s important to note 2021 was an odd year for worldwide stocks. Many investors have seen double digit returns, which is far from normal.
3. Let’s say you deduct $70 biweekly all year, for five years of employment before cashing out.
You’d receive ($70 CAD + [0.15 * $70 CAD] → $10.5 CAD = $80.5 CAD) $65.22USD of Walmart Stock, which at today’s price of $141.68 USD would yield you ~0.46 Shares biweekly. By the end of the year (not accounting for Dividend Reinvestments) you’d be left with ~11.83 Shares. After five years of employment you’d have ~59.15 shares.
Now for simplicity sake, as per 1stock1 the average yearly return of Walmart’s Stock from the beginning of 2016 to the end of 2020 was 19.77%.
Factoring in the stock price increase of 19.77% over the year you held your ~11.8 Shares, they’d be worth approximately $2440.65 CAD when you decided to sell them. Which is an easy $402.869 CAD.
Which option should you go with?
The obvious choice if you plan on staying at the company longterm (5+ years) is Scenario #3. Holding a stock longterm will always yield higher results overall. Though it is important to note that past stock performance can’t be relied upon to determine future performance. It’s merely a prediction of where the company could end up, but anything could easily happen to send the company stock into free fall (i.e. bankruptcy, scandal, performance, etc.). As always, your investment decisions should be based on your risk tolerance. Ask yourself, “If I my investments lost all/some value, would I be able to weather the storm?”
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