Want $1,000 in Dividend Income? Here's How Much You Have to Invest in Walgreens Stock

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We can't say that the healthcare sector is a hotbed of high-yield dividend stocks. Yet there's Walgreens Boots Alliance (NASDAQ: WBA), with its dividend yield that sits just under 10%.

There's a catch here, though -- the pharmacy chain operator's shares have badly under-performed the benchmark S&P 500 index lately, slumping nearly 60% in price since the beginning of this year. So we have to characterize Walgreens stock as high-risk. For those willing to take a chance, here's a look at how many shares would be needed to clock an annual $1,000 in dividend payouts from the company.

Still a high-yield dividend, even after a deep cut

Walgreens' current payout actually represents quite a reduction from previous levels. As 2024 kicked off, the company announced a dividend cut of nearly 50%, reducing its quarterly disbursement to $0.25 per share from its $0.48 predecessor.

Assuming management doesn't chop it again before the end of this year, that $0.25 per share is an even $1 annualized. This makes our math easy (yay!) -- an investor would need 1,000 shares of Walgreens to earn that $1,000.

I have to stress here that Walgreens is a high-risk investment, given the current state of the company. Management has admitted that nearly one-quarter of over 8,000 U.S. stores are unprofitable, and a push to build out in-store medical clinics is an expensive undertaking that might not produce significant returns. Revenue growth hasn't been impressive lately, and the company's posted more quarterly net losses than profits across the past year.

High yield meets high risk

While Walgreens has numerous strengths it can leverage, such as its strong name recognition on the U.S. market and that ubiquity, it feels like a bloated enterprise that needs the right kind of trimming. I doubt in-store clinics are the answer -- Americans tend to trust their usual doctors more -- or that closings of unprofitable outlets alone will solve the problem. I don't feel this stock is a buy, no matter how juicy and tempting that high-yield dividend might be.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Want $1,000 in Dividend Income? Here's How Much You Have to Invest in Walgreens Stock was originally published by The Motley Fool

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