Is Walgreens' High-Yielding Dividend Safe?
If the dividend yield for a stock you are considering exceeds 10%, you should be taking a long, hard look at the business to determine whether that payout is safe. If it's safe, the odds are good other investors would be buying up such a deal (and reducing the yield as a result). A dividend that high generates significant income, which boosts overall returns offers a great buffer during challenging market conditions.
Walgreens Boots Alliance (NASDAQ: WBA) slashed its dividend earlier this year. However, because the stock price fell significantly following the cut, its yield remains high -- at around 12.1% right now. At such a high rate, an investment of roughly $8,300 would result in $1,000 in dividends on an annual basis. But what if Walgreens cuts the dividend again? Then your investment is likely to take a big hit both on dividend and on share price.
Let's take a closer look to see whether Walgreens (reduced) payout is manageable, and determine if investors should brace for another potential cut in the near future.
Source Fool.com
