Avoid Walgreens Boots Alliance And Consider One Better Option – MASHAHER

Investors often look to dividend stocks for a reliable source of income. However, it’s essential to evaluate the sustainability of these dividends. Companies like Walgreens Boots Alliance may present a higher risk due to their high payout ratios, which can indicate that they are distributing more in dividends than they can afford.

Top 10 Dividend Stocks In The United States

Click here to see the full list of 207 stocks from our Top Dividend Stocks screener.

We’re going to check out one of the best picks from our screener tool and one that could be a dividend trap.

Top Pick

Peoples Financial Services

Simply Wall St Dividend Rating: ★★★★☆☆

Overview: Peoples Financial Services Corp., with a market cap of approximately $321.39 million, serves as the bank holding company for Peoples Security Bank and Trust Company, offering a range of commercial and retail banking services.

Operations: The company generates its revenue primarily from banking services, totaling approximately $96.88 million.

Dividend Yield: 3.6%

Peoples Financial Services maintains a stable dividend history, consistently paying out dividends over the past decade, with recent affirmations holding the quarterly dividend at US$0.41 per share. Despite a lower yield of 3.6%, the company’s payout ratio of 49.9% suggests dividends are well-covered by earnings, contrasting positively against firms with unsustainable high payout ratios. However, recent financial reports indicate a decline in net income and interest income year-over-year, which could warrant caution for future sustainability.

One To Reconsider

Walgreens Boots Alliance

Simply Wall St Dividend Rating: ★★☆☆☆☆

Overview: Walgreens Boots Alliance, Inc. is a global healthcare, pharmacy, and retail company with operations in the United States, the United Kingdom, Germany, and other countries, boasting a market capitalization of approximately $10.44 billion.

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Operations: The company generates revenue through its international segment at $23.37 billion, U.S. healthcare at $8.21 billion, and U.S. retail pharmacy at $113.97 billion.

Dividend Yield: 8.3%

Walgreens Boots Alliance faces challenges as a dividend stock to avoid, primarily due to its unprofitable status and lack of free cash flows, making its high dividend yield of 8.27% unsustainable. Over the past decade, dividend payments have been volatile and not well-covered by earnings or cash flows, indicating potential risk for future payouts. Recent financial troubles include a significant net loss reported in Q3 2024, alongside stalled plans for the sale or IPO of its Boots chain, further complicating its financial outlook.

Key Takeaways

• Explore the 207 names from our Top Dividend Stocks screener here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NasdaqGS:PFIS and NasdaqGS:WBA.

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