Stock Analysis

Walgreens Boots Alliance (NASDAQ:WBA) Will Pay A Larger Dividend Than Last Year At $0.48

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NasdaqGS:WBA
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Walgreens Boots Alliance, Inc. (NASDAQ:WBA) has announced that it will be increasing its periodic dividend on the 9th of September to $0.48, which will be 0.5% higher than last year's comparable payment amount of $0.478. This will take the dividend yield to an attractive 4.9%, providing a nice boost to shareholder returns.

Check out our latest analysis for Walgreens Boots Alliance

Walgreens Boots Alliance's Earnings Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Walgreens Boots Alliance's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 30.6% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 49%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

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NasdaqGS:WBA Historic Dividend August 8th 2022

Walgreens Boots Alliance Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was $0.90, compared to the most recent full-year payment of $1.91. This implies that the company grew its distributions at a yearly rate of about 7.8% over that duration. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

Walgreens Boots Alliance Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Walgreens Boots Alliance has been growing its earnings per share at 8.2% a year over the past five years. Walgreens Boots Alliance definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Walgreens Boots Alliance Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Walgreens Boots Alliance has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

What are the risks and opportunities for Walgreens Boots Alliance?

Walgreens Boots Alliance, Inc. operates as an integrated healthcare, pharmacy, and retailer in the United States (U.S.), the United Kingdom, Germany, and internationally.

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Rewards

  • Trading at 55.7% below our estimate of its fair value

  • Earnings are forecast to grow 50.22% per year

Risks

  • Significant insider selling over the past 3 months

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Walgreens Boots Alliance

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