Walgreens Boots Alliance (WBA) Stock

Is the high-yield dividend from Walgreens secure?

On the most recent trading day, Walgreens Boots Alliance (WBA) closed at $9.03, which is an increase of 0.22% compared to the previous day's closing price.

Walgreens has seen a significant 57% drop in its stock price, along with a reduction in dividends and limited chances for reinvestment, suggesting it isn't a great value right now and could struggle more. The company's high debt and a sharp decrease in free cash flow point to the possibility of another dividend cut, even with their plans for capital allocation. Additionally, their emphasis on reducing debt and reinvesting is concerning because of their past poor returns on invested capital.

Walgreens Boots Alliance has a forward yield of about 10.8%, which is the highest in the S&P 500 index. This high yield raises worries about a possible dividend trap because of poor growth expectations and financial difficulties, as shown in its latest Q4 earnings report. The report highlights major issues, such as store closures and a disappointing outlook for earnings per share growth.

Shareholders became worried about a new risk to the company's main operations, and announcing a new dividend did not ease their concerns.

DEERFIELD, Ill.--(BUSINESS WIRE)--Walgreens Boots Alliance, Inc. (Nasdaq: WBA) has announced that its board of directors will pay a quarterly dividend of 25 cents per share, the same as last quarter. This dividend will be paid on December 12, 2024, to shareholders who are on record as of November 18, 2024. Walgreens Boots Alliance and its earlier company, Walgreen Co., have consistently paid dividends for 368 consecutive quarters, which is 92 years.

Walgreens has recently revealed plans to shut down 1,200 stores in the coming years.

Walgreens Boots Alliance is currently undervalued, with low price-to-earnings ratios and a 44% discount compared to its book value, suggesting it has great potential for growth. The new CEO, Tim Wentworth, plans to cut costs and may sell VillageMD, which could improve cash flow and increase the company's value. Conservative valuation methods suggest that WBA is worth at least $28 per share, making it a good investment opportunity.

On Tuesday, the shares of Walgreens Boots Alliance (WBA), a major pharmacy company, dropped after TD Cowen, an investment bank, lowered its price target for the stock from $16 to $14.