Dividend Aristocrat Walgreen Expanding Aggressively

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Walgreen ( WAG ), America's largest drugstore chain, is on a select list of stocks that have increased their dividend every year for at least 20 years.

In Walgreen's case, it's boosted its payout for 38 consecutive years. The latest increase came on July 10, when the company raised its quarterly payout to 31.5 cents a share from 27.5 cents, an increase of 14.5%.

That brings the annual dividend to $1.26 a share, which yields 2.3% at the current share price. While that's just shy of the average S&P 500 yield of 2.4%, it's still pretty impressive given that the Walgreen's stock has far outperformed the benchmark index, rising more than 50% so far this year.

The stock shot up 5% to a new high in heavy volume Sept. 12, after Goldman Sachs upgraded Walgreen to conviction buy from buy due to the company's aggressive expansion.

Walgreen has established a merchandising and marketing partnership with global health and beauty products retailer Alliance Boots. It has also expanded its joint venture with branded and generic drug distributor AmerisourceBergen ( ABC ). And it announced plans earlier this week to buy privately held Kerr Drug, a regional pharmacy chain in North Carolina.

Walgreen's profit likely rose 17% in the fiscal year that ended in August. Profit for the current fiscal year is seen rising 13%. The five-year Earnings Stability Factor is 4 on a scale of 0 to 99, with 0 being most stable.

Meanwhile, Walgreen stands to benefit as demand for drugs rises amid an aging society and as ObamaCare forces more people to purchase health insurance. These favorable trends bode well for future dividend growth.

The company is on S&P's high-yield dividend aristocrats index, along with the likes ofCoca-Cola ( KO ) andExxon Mobil ( XOM ), due to its long record of payout increases. IBD calculates a three-to-five-year dividend growth rate of 25% for Walgreen.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas

Referenced Stocks: ABC , KO , WAG , XOM

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