1. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Holders: 41
Dividend Yield as of July 8: 9.20%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) tops our list of the best dividend stocks with over 8% yield. The company owns and operates retail pharmacy chains and other pharmaceutical manufacturing and distribution companies. In a disappointing start to 2024, the company cut its dividend after maintaining a streak of 47 consecutive years of growth. The decision aimed to retain more cash to support growth initiatives and bolster its balance sheet.
Walgreens Boots Alliance, Inc. (NASDAQ:WBA)’s new CEO, Tim Wentworth, is on a mission to turn things around for the company. In a recent development, he announced plans to close a significant number of underperforming stores and scale back the company’s primary-care business ventures. Along with these closures, the company intends to implement a US Retail Pharmacy action plan aimed at enhancing customer and patient experiences across various channels. Additionally, the company will streamline and focus its U.S. Healthcare portfolio and align its U.S. pharmacy and Healthcare organizations to improve market capabilities.
The big question is whether these strategies are benefiting Walgreens Boots Alliance, Inc. (NASDAQ:WBA). The fiscal Q3 2024 earnings revealed that the company is facing a challenging operating environment. Ongoing pressures on US consumers and recent market dynamics have negatively affected pharmacy margins. That said, the company generated revenues of $35.4 billion, up 2.6% from the same period last year and ahead of expectations. Cash position was also strong, with $605 million in operating cash flow and $334 million in free cash flow, showing an increase of $778 million from a prior-year period. Despite these bright spots, the negatives outweigh the positives for Walgreens Boots Alliance, Inc. (NASDAQ:WBA). The company has lowered its guidance for the second time this year, concerning investors.
That said, there are some rays of hope with the new CEO and the measures being implemented, even if they take time. Additionally, the company’s cash flow suggests a promising future for dividends, which will also be bolstered by cost-cutting efforts. Walgreens Boots Alliance, Inc. (NASDAQ:WBA) currently offers a quarterly dividend of $0.25 per share and has an impressive dividend yield of 9.20%, as of July 8.
The number of hedge funds tracked by Insider Monkey owning stakes in Walgreens Boots Alliance, Inc. (NASDAQ:WBA) jumped to 41 in Q1 2024, from 31 in the previous quarter. These stakes have a total value of over $715 million. Among these hedge funds, Sessa Capital was the company’s leading stakeholder in Q1.
While we acknowledge the potential of WBA as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than WBA but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
