June 26, 2025 a 03:31 pm
WBA: Dividend Analysis - Walgreens Boots Alliance, Inc.
Walgreens Boots Alliance exhibits a historically strong dividend profile with over 40 years of consecutive dividend payments. However, recent trends indicate financial instability reflected in negative earnings and challenging payout ratios. These factors raise concerns about future dividend sustainability and call for close monitoring.
📊 Overview
The table below provides a snapshot of Walgreens Boots Alliance's dividend profile, highlighting its sector, current dividend yield, and dividend history:
| Metric | Value |
|---|---|
| Sector | Pharmaceutical Retailers |
| Dividend Yield | 11.55% |
| Current Dividend Per Share | 1.46 USD |
| Dividend History | 40 years |
| Last Cut or Suspension | 2024 |
📈 Dividend History
Walgreens Boots Alliance's dividend history underscores its commitment to returning value to shareholders. These historical dividends reveal potential investment reliability, though recent cuts signal caution.
| Year | Dividend Per Share (USD) |
|---|---|
| 2024 | 1.00 |
| 2023 | 1.92 |
| 2022 | 1.915 |
| 2021 | 1.890 |
| 2020 | 1.850 |
📉 Dividend Growth
The growth rates of dividends at Walgreens Boots Alliance have ranged from negative in recent years, thus weakening its growth stance. Monitoring these patterns becomes imperative for future projections.
| Time | Growth |
|---|---|
| 3 years | -0.19% |
| 5 years | -0.11% |
The average dividend growth is -0.11% over 5 years. This indicates a declining dividend growth trend attributable to financial constraints.
✅ Payout Ratio
Payout ratios are crucial in understanding the sustainability of dividend payments. They signal the balance between earnings and dividends paid.
| Key Figure | Ratio |
|---|---|
| EPS-based | -21.83% |
| Free Cash Flow-based | 221.29% |
The EPS-based payout ratio at -21.83% indicates that the dividends paid are not backed by earnings. A Free Cash Flow-based ratio of 221.29% denotes stretched cash reserves, jeopardizing dividend sustainability.
⚠️ Cashflow & Capital Efficiency
Evaluating Walgreens Boots Alliance’s cash flow stability and capital efficiency unveils areas requiring improvement, necessary for sustaining long-term operations and dividend payments.
| Indicator | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | -4.55% | 0.65% | 7.14% |
| Earnings Yield | -108.17% | -14.10% | 14.31% |
| CAPEX to Operating Cash Flow | 135.66% | 93.76% | 44.47% |
| Stock-based Compensation to Revenue | 0.12% | 0.28% | 0.29% |
| Free Cash Flow / Operating Cash Flow Ratio | -35.66% | 6.24% | 55.53% |
The analysis shows suboptimal cash flow metrics, with an increasing CAPEX percentage and fluctuating free cash flow pointing to potential future liquidity challenges.
🗣️ Balance Sheet & Leverage Analysis
A strong balance sheet is pivotal in safeguarding against financial distress. Walgreens Boots Alliance's leverage metrics are critical for stakeholders.
| Indicator | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 3.15 | 1.67 | 1.21 |
| Debt-to-Assets | 40.54% | 34.70% | 39.36% |
| Debt-to-Capital | 75.88% | 62.62% | 54.71% |
| Net Debt to EBITDA | -9.76 | 9.43 | 6.89 |
| Current Ratio | 0.61 | 0.63 | 0.75 |
| Quick Ratio | 0.37 | 0.30 | 0.38 |
| Financial Leverage | 7.76 | 4.83 | 3.07 |
The analysis reveals high leverage and deteriorating liquidity ratios, raising concerns about the viability and flexibility of Walgreens Boots Alliance's current financial structure.
✅ Fundamental Strength & Profitability
Assessing profitability and operational efficiency gives insight into Walgreens Boots Alliance's ability to generate income relative to revenue, assets, and equity.
| Indicator | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | -82.68% | -15.38% | 14.77% |
| Return on Assets | -10.66% | -3.19% | 4.81% |
| Return on Invested Capital | -27.08% | -12.28% | 1.94% |
| Net Margin | -5.85% | -2.21% | 3.27% |
| EBIT Margin | -9.30% | -3.48% | 2.47% |
| EBITDA Margin | -7.64% | 2.50% | 3.73% |
| Gross Margin | 17.96% | 19.46% | 21.30% |
| Research & Development to Revenue | 0.00% | 0.00% | 0.00% |
Negative profit margins and returns on equity, assets, and capital signify operational inefficiencies, necessitating strategic financial recalibration.
📈 Price Development
📉 Dividend Scoring System
| Category | Score | Score Bar |
|---|---|---|
| Dividend Yield | 5 | |
| Dividend Stability | 1 | |
| Dividend Growth | 1 | |
| Payout Ratio | 1 | |
| Financial Stability | 1 | |
| Dividend Continuity | 2 | |
| Cashflow Coverage | 1 | |
| Balance Sheet Quality | 1 |
Total Score: 13/40
⚠️ Rating
Walgreens Boots Alliance currently faces significant financial challenges reflected in its declining profitability, high leverage, and unsustainable payout ratios. Immediate strategic adjustments are required to safeguard future dividend payments and stabilize financial health. Caution is advised to dividend-focused investors.