Dividend cut: Walgreens (WBA)
Jan 4 (Reuters) – Walgreens Boots Alliance (WBA.O) on Thursday nearly halved its dividend payout as it attempts to conserve cash amid low consumer spending and intense competition, sending the U.S. pharmacy chain’s shares down 11%.
Thoughts on WBA news of dividends cut
This is a quick post to share with you the latest news about Walgreens (WBA) cutting it´s dividends to half, meaning Walgreens (WBA) will be excluded from the dividend aristocrats index for breaking the required 25 years of uninterrupted dividend increases.
Although, it is always hard to see a company cutting dividends after increasing dividends for so many years. This things happend and should not be a surprise.
As I mentioned in my September “Monthly Stock Buying Session” :
“At a first glance you may be tempted to buy WBA with an impressive yield of 8,73% and a very reasonable payout of 38,21%. However if you deep dive, you will notice this yield is not driven by dividend increases, but company stocks are collapsing for some time now.”
I even mentioned that Walgreens (WBA) dividends may be at risk given several financial probrlems, and a very serious profitability issue and didn´t seem easy to reverse.
Takeaway
- There are no free lunchs at the market. Prices do provide signals and you should never prioritize the highest yields without evaluating the risks and doing required due dilligence.
- This things happend, but can also be prevented with the right method, as I showed you in the September Monthly Stock Buying Session
- Even when negative impacts will hit your portfolio from time to time, specially considering that we are going to be invested for the long term, diversification is key. I didnt´have WBA in my portfolio, but I would never have more than 3% of the same company.
- The rule of my investment method says that if a company cuts dividends it has to be sold inmediatly, since it is no longer contributing to the main objective of my portfolio which is to generate a growing income. If I had to sell WBA today at a 11% discount for no more than a 3% of the portfolio this should have a minimum negative impact.
Note for enthusiastic:
There are other tools that I have developed for myself that I do use to facilitate and speed up my stock picking process covering many other ratios and indicators I didn´t mention in this simplified analysis. Some of those are currently being enhanced and adapted to make it available to you on this website. If you like this article or are interested in receiving a notification when new tools or content is available register to our newsletter at the bottom of this page (I don´t spam).
Disclaimer: The information provided in this article is for educational purposes only and should not be considered as investment advice. Always conduct thorough research and consult with a financial advisor before making any investment decisions.
