This pharmacy company has been under pressure due to the drug industry’s ups and downs. But it is trading at a very undervalued level, and has a healthy annual dividend yield of 3.14%, paid quarterly.
Walgreens Boots Alliance, Inc. (WBA)
From Sure Dividend Newsletter
Walgreens Boots Alliance, Inc. (WBA) is posting sluggish results due to pricing pressure and uncertainty in the prescription medication industry. The company’s adjusted EPS declined by 0.5% in fiscal 2019.
But the time to buy into a quality dividend growth stock is not when optimism surrounds it; quite the opposite. “The best thing that happens to us is when a great company gets into temporary trouble… We want to buy them when they’re on the operating table.”
Walgreens is a great business. It has increased its dividend payments for 44 consecutive years, making it one of just 57 Dividend Aristocrats. The company managed to compound adjusted earnings-per-share at a robust 12.9% annually from 2009 through 2018. And it’s been run by Italian billionaire Stefano Pessina since July 2015, who has a phenomenal track record in the pharmaceutical industry.
Valuation is where Walgreens gets interesting. The stock has a 3%+ dividend yield and trades for a P/E ratio of under 10 using fiscal 2019 adjusted EPS of $5.99. For perspective, the company’s average P/E ratio over the last decade is around 15.
We believe this high quality dividend stock is poised for strong returns ahead.
Disclosure: I am long WBA.
Ben Reynolds, Sure Dividend Newsletter, www.suredividend.com, support@suredividend.com, 800-531-0465, December 26, 2019