Monday, November 2, 2015

Recent Buy - Walgreens Boots Alliance Inc (WBA)

Hi Everyone,

Another building block to the American Dividend Dream has been bought.  This time, a little bit smaller of a purchase than some of the previous ones but a purchase nonetheless.

Personally, these buy posts make me hungrier than ever to keep making money, keep saving and keep investing.  This lifestyle is not for the faint of heart as you might be called stingy, might over spend on a new toy or obsess over retirement, but I have an amazing wife who appreciates my work ethic and determination to retire at an early age. The income that we are starting to make every month is starting to accelerate and it is fun to watch.  If you jump over to our Portfolio page, you can see that we are bringing in a pretty substantial amount of dividend income every year.   

With this recent purchase, my wife and I have put a total of around $43,500 to work since the beginning of 2015.  My goal of investing roughly $40,000 has been accomplished! With that being said, lets get down to the numbers...

We purchased 17 shares of Walgreens Boots Alliance (WBA) at $85.24.  This purchase adds $24.48 of annual dividends to our account.

We now own 17 shares of WBA as this was an addition to previous purchases.  We are invested in 40 individual companies.  

WBA Statistics:

P/E:  21.45
Yield:  1.66%
Market Cap:  92B
Dividend Growth Rate (3yr):  17%
Dividend Growth:  39 years
Payout Ratio: 38%

Walgreens Boots Alliance was formally called Walgreens but merged with Boots Alliance, hence the name.  Walgreens has been around since 1901 and between CVS almost own a duopoly in the United States retail pharmacy space.  Over just the past few days, Walgreens announced that they are planning to purchase Rite-Aid, another retail pharmacy player.  Due to this announcement the stock has dropped considerably over the past couple days for whatever reason.  I suppose you could say that they are overpaying for the company and its disappointing they are discontinuing their share buyback to fund the acquisition but I see the other side of things.  The merger with Boots has provided cost synergies of $800 Million between the combined companies, revenue was up 50% year over year and they beat the earnings per share estimates by .07.

Looking to the future, WBA plans to make $4.35 - $4.55 per share on earnings which taking $4.35 as a midpoint, you get a 19.50 PE ratio.  I think that is a good place to initiate a position in a company that will continue to see cost synergies and increased revenue potential due to the mergers.

The yield is a bit lower than I usually like but with a payout ratio of 38% and accelerated EPS growth, I think there could be substantial dividend growth in the future.  With a retirement goal around 13-15 years away, the accelerated growth could potentially compound faster than a stock with a higher yield and lower growth.  I also wanted a bit more exposure to the healthcare area and with over a 10% drop in just the past 4 days, this company gets me that exposure and at a discount.

You can check out all the other purchases we have made for the year on my Stock Purchases and Sells page.

So there you have it, the next building block on the path to the American Dividend Dream!  What do you think, good purchase, bad purchase?  What are you looking to buy next?



  1. The yield is the biggest drawback to investing in WBA but there's no doubting their history. I'm just glad that I picked up shares on the tail end of the ExpresScripts debacle back in 2012 so my YOC is at 4% right now thanks to the great entry point and excellent dividend growth. Wonderful company.

    1. Yea, the yield is a bit lower than I would like as well but hopefully the growth makes up for it. I've got another buy post coming shortly on a company that has a much higher yield that kind of balances out the income to 3.5% between the two companies. Stay tuned!

      Congrats on getting into the company so soon, I'm jealous of that 4% YOC. Thats pretty significant!

      Thanks for stopping by.