A deep dive into the company's ability to continue paying dividends
Dividend growth investing isn't as easy as simply buying
stocks trading at a yield that is appealing and then holding forever. Dividend
growth investors do seek investments that provide income, but these investors
usually have a time horizon that is very long. As these investors plan on
living off dividend income in their retirement years, the holding period could
easily be several decades.
Therefore, dividend growth investors have to be reasonably
assured that their investment dollars are building positions in companies that
will likely be able to continue paying and raising dividends in the future.
Aside from the dividend yield itself, there are several
areas that dividend growth investors should review prior to making a stock
purchase.
As such, we will use a variety of metrics in order to
determine if Walgreens Boots Alliance Inc. (NASDAQ:WBA) is worth purchasing.
Walgreens is the largest drug distributor in the world. The
company has nearly 14,000 stores around the world, including almost 9,300
stores in the U.S. and its territories. Walgreens added 2,186 Rite Aid stores
to its core business in 2017. The company is heavily dependent on its pharmacy
business, as nearly three-quarters of last year's revenue came from this
segment. General merchandise contributes the remaining quarter. Walgreens has a
market capitalization of $31 billion.
Walgreens most recent quarter was challenging. Revenue was
essentially flat, but adjusted earnings per share fell 44% and missed Wall
Street analysts' projections.
That said, the company's revenue has steadily improved over
the last decade.
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