This pharmacy chain just got lighter with a sale of a business, and earnings estimates are rising.
Walgreens Boots Alliance, Inc. (WBA)
From Sure Dividend
Our income recommendation for 2021 was Walgreens Boots Alliance. The stock has done well, generating total returns (including dividends) of 39.0% this year (through 6/14/21) versus 14.1% for the S&P 500 ETF (SPY).
And Walgreens as a company has not stood still in 2021. The company changed CEOs on March 15th when Rosalind Brewer succeeded previous CEO Stefano Pessina. Walgreens also closed on its sale of the majority of its Alliance Healthcare business for ~$6.5 billion to AmerisourceBergen (ABC). The company is using proceeds to eliminate $3.3 billion in debt from its balance sheet and for investment and growth purposes.
Finally, the company issued guidance for mid-to-high single digit growth for adjusted earnings-per-share for fiscal 2021.
The news surrounding Walgreens has been largely positive in 2021. As a result of price gains, the stock’s dividend yield has fallen from 4.5% during our initial writeup to around 3.4% now.
We now view Walgreens as a quality Dividend Aristocrat that is trading at a small premium to our fair value estimate. Walgreens is a long-term hold at current prices.
Disclosure: I am long WBA.
Ben Reynolds, Sure Dividend Newsletter, suredividend.com, support@suredividend.com, 800-531-0465, June 15, 2021