Walgreens Boots Alliance stock (NASDAQ:WBA) has much to offer dividend investors or anybody searching for a secure harbor in unpredictable economic times.
The corporation is a significant healthcare provider in the United States and the United Kingdom. It has a good dividend and a stable business centered on its over 9,000 retail pharmacy locations.
Let’s consider why it would be a good time to purchase or sell.
Walgreen Stock Bull Case:
1.Its dividend is rising and sustainable.
The main incentive to acquire Walgreens stock (NASDAQ:WBA ) is the possibility of consistent, passive income.
As a result, as long as the firm stays successful and its profits rise—both of which it has done over the last decade—it is fair to believe that the circumstances are favorable for it to continue paying out its dividend year after year.
The future dividend yield of Walgreen stock (NASDAQ:WBA) is more than 5.9%, which is much greater than the about 2.2% yield of CVS Health, another large U.S. drugstore retail business. Furthermore, Walgreens has increased its payment by 20% in the last five years, and its payout ratio is a healthy 32%. That implies management has plenty of room to keep raising the dividend without depleting the company’s earnings.
2.Its consumer health sector is about to launch.
Another incentive to purchase Walgreens stock is the company embarking on a significant new growth endeavor. While Walgreens is well known for its pharmacy, it also expands into general care, urgent care, and advising services via its Walgreens Health business at its in-store clinics. Those initiatives, although still in their infancy, are rapidly taking off. The company’s 315 operational clinics generated $596 million in sales in the third quarter of fiscal 2022.
Walgreen Stock Bear Case:
1.Initiatives will not significantly increase revenue.
It will be practically difficult for a massive corporation with a vast revenue base to grow fast since the demand for the goods and services in its primary sectors would not rise much over time. Its entire revenue in 2021 will be more than $132 billion. When we include the expected $2 billion in new sales from Walgreens Health, the top line will grow by just 1.5%.
2.Shares are likely to continue underperforming.
Retail pharmacies aren’t exactly a hot part of the economy, and they have never been, so there’s little chance for Walgreens to beat the market. The stock has lost more than 47% in total return over the last five years, but an index fund like the SPDR S&P 500 ETF Trust has gained approximately 60%.
Simply stated, Walgreens’ profits will continue to increase more slowly than the typical corporation, implying that its stock will continue to underperform. Of course, this isn’t much of an issue for shareholders who are keeping the stock for the dividend.
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Author Okoro Chinedu 
