Did you miss this stock's recent dividend hike?

With the market rebounding in recent months, it's no surprise that many investors are starting to consider holding more dividend stocks. These investments often look cheaper than their growth-focused counterparts at the moment, even if they provide immediate income.

Ideal dividend-paying stocks require several factors, including market leadership, a strong financial position and impressive sales growth. In addition, income investors look for a long track record of annual dividend growth.

One stock meets all these criteria. It has also just announced an eye-opening calendar year dividend increase for 2024. Let's take a look at why investors might want to take a closer look now.Wal-Mart (NYSE: WMT)This is a dividend-paying stock.

Walmart's current yield is below average

Wal-Mart does have a relatively low dividend yield at the moment. A purchase of its shares yields 1.3%, which is slightly lower than the yield onS&P 500 Index 1.4% average yield. Retail yields are much higher, for exampleHome Depot) (2.5%) andTajikistan(Target) (2.6%).

However, investors have good reason to expect Wal-Mart's dividend growth to accelerate soon, potentially closing the gap with these peers. That's because the company announced a 9% dividend increase in late February, roughly tripling the previous year's growth rate. Wal-Mart generated $15 billion in free cash flow last year, compared to $12 billion a year ago, so it is now sitting on $10 billion in cash." We are proud of our team and excited to continue our momentum," said Doug McMillon, chief executive officer, in a press release.

Walmart is capitalizing on a strong earnings advantage

Walmart's sales have grown even faster in recent quarters, with fourth-quarter revenues up 61 TP3T year-over-year, with core U.S. markets up 41 TP3T year-over-year, thanks to 41 TP3T of customer traffic growth. On the other side of the coin, peers like Target saw traffic decline as they try to better challenge Walmart's price leadership.

Admittedly, Wal-Mart won't be thrilling investors with big growth in the near term. Management expects sales growth in fiscal 2025 to be in the range of 3% to 4% and operating income growth in the range of 4% to 5%. However, these increases come on top of solid growth in FY2024, reflecting a second consecutive year of expanding profitability. Combined with Walmart's surging cash flow, these gains will support faster dividend growth in the coming years.

Things to Know About Walmart Stock

To be sure, Wal-Mart faces some challenges in realizing its goal of accelerating growth and increasing its direct cash flow. It will have to continue to work with the Tata Group.Kit Kat(Target) andCostco WholesaleWal-Mart has not yet established a large enough digital advertising department to influence the wider business. Wal-Mart also hasn't built up a large enough digital advertising division to influence its broader business. Meanwhile, Wal-Mart's e-commerce division has gained enough momentum to generate more than $100 billion in revenue in its last full fiscal year.

It's unclear whether Wal-Mart's management team has the resources and desire to take a more aggressive approach to dividends, so income investors may just want to keep an eye on the stock for now. Consider other industry leaders that pay more generous dividends, such as Home Depot. The home improvement retailer raised its dividend by 8% this year, and its yield is about 1 percentage point higher than Wal-Mart's. The company's dividend is also higher than Wal-Mart's.

However, don't leave Walmart out of the dividend growth options. Another year of growth in metrics like cash flow, customer traffic and margins could spur Walmart to double-digit dividend growth by early 2025.

Should you invest $1,000 in Walmart now?

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Demitri Kalogeropoulos owns shares of Costco Wholesale and Home Depot.The Motley Fool holds recommendations for Costco Wholesale, Home Depot, Target, and Walmart.The Motley Fool has a disclosure policy.

Did You Miss This Stock's Recent Dividend Boost? This post was originally published by The Motley Fool.