Walgreens Boots Alliance, Inc. (WBA), a dependable dividend payer, has its WBA stock (NASDAQ:WBA) down by more than 40% from its peak and may be a once-in-a-lifetime opportunity for long-term investors.
It not only offers a large dividend yield, but it has also grown its payment for 47 consecutive years. And it has the cash and a growth strategy to keep it going for the foreseeable future.
WBA Stock: The Highest Dividend Yield Ever Recorded
Walgreens Boots Alliance has an impressive dividend history. Since prohibition was ended and the Golden Gate Bridge was erected, checks have been sent to its stockholders every quarter. It was the year 1933. That was a very long time ago. I can’t discover any evidence that the firm has ever given a yield greater than its current 6.1%. Isn’t there some catch?
WBA Stock: A safety buffer to preserve the payment
Many high-yielding stocks are flawed in some way. Some investors are already anticipating a dividend decrease. Because dividends are not assured, the yield is useless. Others’ businesses are contracting. The only way to keep shareholders involved is to distribute all earnings to them.
Walgreens seemed to have no trouble paying the payments. It only distributes around half of its free cash flow as dividends. Recent growth figures do not bode well. Sales for the nine months ending in May were little more than $100 billion, representing a 2% increase over 2021. However, the most recent quarters are being compared to the peak of the COVID vaccination. Analysts predict flat revenues this year and a 1.4% increase next year with a neutral rating for WBA stock (NASDAQ:WBA)
Constructing the new growth engine
Walgreens acquired a controlling stake in VillageMD, a supplier of primary care services that quadrupled sales between 2017 and 2021. Combining primary care and retail pharmacy operations improves patient satisfaction and generic medication usage. That’s a good thing since generic pharmaceuticals are usually more lucrative for pharmacies and less costly for customers. The collaboration now has 120 clinics and plans to expand to 1,000 sites by 2027.
Management simply supplemented those initiatives by purchasing the remaining share of specialized pharmaceutical business Shields Health.
All of these actions seem to be appropriate for developing a consumer healthcare ecosystem. So far, Wall Street is skeptical. CVS Health (CVS 2.51%), a competitor in its own transition, trades at more than twice the price-to-sales ratio. CVS stocks are up 12% year to date, while WBA stock (NASDAQ:WBA) is down by a third.
Boring may be lovely.
Walgreens Boots Alliance is not a rapidly expanding firm. And WBA stock may look like a very dull stock to have in your portfolio. But that’s exactly the purpose. With 13,000 outlets worldwide and a dirt-low price, it’s a reliable element of a diversified portfolio. Investors seeking to earn money while adding stability to their portfolio would struggle to find a better choice.
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