Walgreens Slashes Dividend by Almost Half

Core Viewpoint - Walgreens Boots Alliance (WBA) has significantly reduced its dividend, which may jeopardize its status as a Dividend Aristocrat, while the company aims to reinvest the saved capital into growth initiatives to enhance shareholder value [1][3][6]. Dividend Changes - The company announced a quarterly dividend of 25 cents per share, down from 48 cents per share in the previous quarter [1]. - This reduction in dividend payout is a strategic move to increase cash flow and invest in sustainable growth initiatives [3]. Financial Performance - Walgreens reported fiscal first-quarter earnings of 66 cents per share, surpassing Wall Street's forecast of 62 cents per share [5]. - The company's sales reached $36.7 billion, exceeding analysts' estimates [5]. - Over the past 20 years, WBA shares have generated a total return of less than 1%, lagging the S&P 500's total return by approximately 10 percentage points [5]. Cost-Saving Initiatives - The company is on track to achieve $1 billion in cost savings this fiscal year, alongside $600 million in reduced capital expenditures and $500 million in working capital benefits [4]. - Analysts have responded positively to the decision to reinvest cash back into the business rather than distributing it to shareholders [3][4]. Stock Performance - WBA stock has delivered negative total returns over the past one, three, five, and ten-year periods, indicating persistent share-price depreciation despite previous annual dividend increases [6]. - The potential loss of Dividend Aristocrat status may be offset if the new capital plans successfully revitalize the stock price [6].