Walgreens Boots Alliance: The Former Dividend Gem in Crisis?

In recent times, dividend cuts and suspensions have had to be accepted unexpectedly. For instance, in August, Intel surprised with the announcement to suspend its dividend—although this could have been anticipated given the company’s aggressive growth strategy and weak financial position. Another company currently in focus is Walgreens Boots Alliance. The pharmacy giant has its own costly growth strategies, including the opening of hundreds of primary care clinics. At the same time, competition is growing due to the online retail giant Amazon, which is making it increasingly easier for customers to have medications delivered directly to their homes. Given the increasing competitive pressure and the enormous capital needs to promote the health business, Walgreens finds itself in a difficult situation. Under the new leadership of CEO Tim Wentworth, the company seems to be considering drastic measures. This year, Wentworth has already cut the dividend, and Walgreens is reportedly examining further asset sales to improve cash flow. Rumors suggest that Walgreens might even sell its entire stake in VillageMD, a core element of its health strategy. This potential scenario indicates fundamental changes in the growth strategy and makes another dividend cut or suspension seem likely. In contrast to Intel, which aims to expand its foundry business, the future of Walgreens appears less clear and potentially riskier. In addition to dividend cuts, measures such as the sale of business divisions or the reduction in the number of stores could help strengthen financial stability and avoid a dividend suspension. The hope that Walgreens under Wentworth will achieve a successful turnaround remains, but the road is likely to be bumpy. The company is grappling with growth issues and low margins. For decades, Walgreens was considered a reliable dividend stock, but that fundamentally changed in 2023. Investors should therefore no longer rely on this stock as a reliable source of dividends. For risk-loving investors, Walgreens could be a speculative option, but the future of the company remains highly uncertain. There are significant risks, and whether Wentworth can successfully initiate the transformation remains to be seen. Before investing in Walgreens Boots Alliance, you should consider the following: According to Motley Fool Stock Advisor, there are currently ten stocks that are more promising, including Nvidia, which has recorded a remarkable return since being recommended by the Advisor.