April 10, 2025 a 02:44 pm
Dividend Analysis - Walgreens Boots Alliance, Inc.
Walgreens Boots Alliance, Inc. presents a complex yet intriguing dividend profile. Despite a history of consistent dividend payments over the past 40 years, recent challenges paint a cautious outlook for investors. With an exceptionally high dividend yield of 11.55% and a recent cut in 2024, stakeholders must consider the sustainability of these returns. The company's payout ratios indicate potential financial strain, raising questions about future dividend continuity.
📊 Overview
Walgreens Boots Alliance operates in the Health Services sector. The current dividend yield is a striking 11.55%, resulting from a notable dividend per share standing at $1.46. Over its 40-year continuous payment history, Walgreens has demonstrated a reliable dividend record up until the recent cut in 2024.
| Metric | Details |
|---|---|
| Sector | Health Services |
| Dividend yield | 11.55 % |
| Current dividend per share | 1.46 USD |
| Dividend history | 40 years |
| Last cut or suspension | 2024 |
🗣️ Dividend History
Walgreens' dividend history highlights resiliency, contributing to investor confidence. The recent cut in 2024 introduces uncertainty, warranting a closer examination of its implications.
| Year | Dividend Per Share (USD) |
|---|---|
| 2024 | 1.00 |
| 2023 | 1.92 |
| 2022 | 1.915 |
| 2021 | 1.890 |
| 2020 | 1.850 |
📈 Dividend Growth
The growth rate has been diminishing, with a 3-year growth of -0.19% and a 5-year rate of -0.11%, reflecting pressures on profitability and future dividend expansions.
| Time | Growth |
|---|---|
| 3 years | -0.19 % |
| 5 years | -0.11 % |
The average dividend growth is -0.11% over 5 years. This shows moderate but steady dividend growth.
💡 Payout Ratio
Payout analysis unveils a concerning picture; an EPS-based payout ratio of -21.83% and a free cash flow-based ratio of 221.08% suggest challenges in sustaining dividends. These metrics need addressing to reassure potential investors.
| Key figure | Ratio |
|---|---|
| EPS-based | -21.83 % |
| Free cash flow-based | 221.08 % |
These figures indicate an unsustainable payout considering the current earnings deficit and high cash utilization.
📊 Cashflow & Capital Efficiency
Robust cashflow is essential for dividend health. Walgreens' free cash flow yield stands at 6.12%, yet significant portions are tied up, limiting CAPEX and increasing operational risks.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Free Cash Flow Yield | 7.14% | 0.65% | -4.55% |
| Earnings Yield | 14.31% | -14.10% | -108.17% |
| CAPEX to Operating Cash Flow | 44.47% | 93.76% | 135.66% |
| Stock-based Compensation to Revenue | 0.29% | 0.28% | 0.12% |
| Free Cash Flow / Operating Cash Flow Ratio | 55.53% | 6.24% | -35.66% |
Cashflow metrics call for caution with high CAPEX impacting further dividend payouts and overall capital retention.
🔍 Balance Sheet & Leverage Analysis
Debt levels pose potential risks to dividend policy, illustrated by a high debt-to-equity ratio and leverage indicators.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Debt-to-Equity | 1.21 | 1.67 | 3.15 |
| Debt-to-Assets | 39.36% | 34.70% | 40.54% |
| Debt-to-Capital | 54.71% | 62.62% | 75.88% |
| Net Debt to EBITDA | 6.89 | 9.43 | -9.76 |
| Current Ratio | 0.75 | 0.63 | 0.61 |
| Quick Ratio | 0.38 | 0.30 | 0.37 |
| Financial Leverage | 3.07 | 4.83 | 7.76 |
Leverage metrics suggest heightened financial risk, necessitating vigilant management to ensure long-term solvency.
✅ Fundamental Strength & Profitability
The fundamentals reveal alarming dips in profitability, affecting overall capital dynamics and putting dividend safety at risk.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Return on Equity | 14.77% | -15.38% | -82.68% |
| Return on Assets | 4.81% | -3.19% | -10.66% |
| Margins: Net | 3.27% | -2.21% | -5.85% |
| Margins: EBIT | 2.47% | -3.48% | -9.30% |
| Margins: EBITDA | 3.73% | 2.50% | -7.64% |
| Margins: Gross | 21.30% | 19.47% | 17.96% |
| Research & Development to Revenue | 0% | 0% | 0% |
The deteriorating margins and returns highlight pressure on operational effectiveness, critical for future dividend stability.
📉 Price Development
📏 Dividend Scoring System
| Category | Score (1-5) | Score Bar |
|---|---|---|
| Dividend yield | 5 | |
| Dividend Stability | 2 | |
| Dividend growth | 1 | |
| Payout ratio | 1 | |
| Financial stability | 1 | |
| Dividend continuity | 2 | |
| Cashflow Coverage | 1 | |
| Balance Sheet Quality | 1 |
Overall Score: 14/40
💡 Rating
Walgreens Boots Alliance's dividend profile presents significant challenges. Investors should exercise caution given the financial headwinds impacting dividend visibility and sustainability. A prudent approach is advised until recovery signs become evident.