Is Walgreens A Good Dividend Stock?

Is Walgreens a Good Dividend Stock? Dividend stocks are a great incentive for retail investors and traders to buy into a company and stick with it for the long haul, especially if the company’s dividend is extremely lucrative compared to the competition.

For example, the average payout for the S&P 500 is about 1.6% — a company can be somewhere above or below this, but needless to say, the higher the better (especially if the company’s dividends are trending upwards and have been for a good amount of time). Is Walgreens one such company? And  is it a worthy investment? Let’s look at the facts and figures.

Walgreens Stock: 10,000 Foot View

Unlike much of the competition, Walgreens didn’t take a major tumble as a result of the coronavirus pandemic. That’s in some part due to the fact that it was already on the decline for years beforehand.

After nearly hitting $100 a share in July of 2015, Walgreens steadily and dependably decreased in value. In the grand scheme of its share price, it almost looks like COVID-19 didn’t even happen — WBA share price was probably going to continue dropping regardless.

This differs significantly from other companies who either tanked during the coronavirus or soared as a result of the increased need of the pandemic.

However, Walgreens has gone through a major change in recent months: Ever since hitting $35 a share in September of 2020, Walgreens has been on the up-and-up. It’s currently trading significantly higher, with that number likely to continue to rise in the future.

Rightfully so, too — as a publicly traded company since the 1920s, Walgreens is a dependable brand that has been through several economic hardships and has lived to tell the tale each time. Post-COVID-19, the story will surely be no different.

Does Walgreens Pay A Dividend?

While Walgreens might look worse off than other retailers as of late, Walgreens still manages to pay a dividend to its loyal shareholders.

This likely has something to do with the sheer amount of durability the company has shown since their inception in 1901 — After lasting over a century in the business, Walgreens and its Board of Directors is wise to continue dishing out dividend payments to their investors as a thank you for believing in them and its future as a company.

What’s The Dividend On Walgreens?

Looking back over the past few decades, the dividend on Walgreens seems absolutely irresistible: From the 10 cent payment it offered in the late 1980s to the nearly two dollars they’re offering today, Walgreens’ dividend has never stopped climbing upwards and shows no signs of veering from that trend anytime soon.

As of its latest dividend payment, which was announced in May of 2021 and came to shareholders the following month in June, Walgreens’ dividend was $1.85 a share — a yield of nearly 3.4%, or more than double that of the average S&P 500’s dividend yield.

Is Walgreens Dividend Safe?

All it takes is one quick glance at the steady and dependable increase from 1989 to today to see that the dividend paid to Walgreens shareholders has historically been very safe.

The actual percent yield has certainly fluctuated plenty as the company’s price per share has wavered over the years, but it should be very reassuring to retail investors to see that the one thing that has remained continually positive is their dividend. In other words, yes: Walgreens’ dividend is safe.

How Often Are Walgreens Dividends Paid?

Instead of giving out one payment annually or rewarding investors with additional shares, Walgreens is one of many companies to pay dividends quarterly. These are announced in February, May, August, and November, and typically hit investors’ accounts the following months in March, June, September, and December.

That’s four times a year that investors and traders are treated to the company’s appetizing dividends.

Is Walgreens A Good Dividend Stock?

Taking into account the high percentage yield and the consistent growth the company’s dividends have shown over the past few decades, it seems absolutely fair to say that Walgreens is more than just a good dividend stock — it’s an excellent one.

Not many companies can offer such a high percentage yield, and with the company’s dividend inching ever-closer to the $2.00 mark while the shares themselves continue to rise, Walgreens is positively a good dividend stock.

What investors need to tradeoff with such a dependable dividend is slower growth. If you’re looking for stocks with high earnings growth or fast top line growth, you’ll need to look elsewhere.

Walgreens Has A Target On Its Back

As with any investment, there are risks to owning Walgreens stock. While WBA stock price has been on the rise recently on the New York Stock Exchange, it isn’t out of the woods yet — it’s still about $40 away from its highest price point ever, and that could take quite some time for them to meet or surpass.

Then, of course, there’s the elephant in the room: online retailers like Amazon (AMZN) and bigger box stores like Target (TGT) or Walmart (WMT) who could very easily push Walgreens to the side in the blink of an eye.

It also has plenty of debt, as do plenty of other companies, but its debt has been steadily on the rise lately.

All of this is added to the simple fact that profits are down, whether it be as a result of COVID-19 or simply the result of people looking elsewhere for the kinds of goods they used to buy at Walgreens. Any one of these is a significant risk, and all of them combined makes for a pretty risky picture.

Is Walgreens Stock A Buy?

In spite of the substantial dollop of serious risks associated with the company, Walgreens and its huge dividends are enough to make even the most casual investor or trader consider taking stake in the company.

As long as its dividends continue to trend upwards as they’ve been doing for decades now, then Walgreens is a buy without a doubt.

Even if its revenues stay muted, and competition keeps growing, Walgreens and its dividends could make for quite a worthy and rewarding investment if held over the long-term.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.