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Author: DBrown7 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8751  
Subject: Walgreen (WAG) Date: 10/2/2012 4:41 PM
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I don't own Walgreen, but I see the yield is up to 3%. This is a Dividend Champion that recently raised its quarterly dividend to $.275/sh.

The stock price has gone essentially nowhere over the last decade while the dividend has increased from $.036 to the current $.275. That's more than 7x growth over the period. Based on free cash flow for the fiscal year just ended, the payout ratio is only around 30%, so it would appear that there is plenty of room to continue to raise the dividend in the future.

The stock currently trades at a much more reasonable multiple than it did a decade ago, so there might be some decent room for capital appreciation along with dividend growth, if WAG executes well.

Don
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7546 of 8751
Subject: Re: Walgreen (WAG) Date: 10/2/2012 4:55 PM
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WAG price is beat down due to their battles with Express Scripts, which has withdrawn from Walgreens. That can get you nice yield but you have to worry about the hit to earnings and potential threat to the dividend.

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Author: kelbon Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7547 of 8751
Subject: Re: Walgreen (WAG) Date: 10/2/2012 5:27 PM
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WAG price is beat down due to their battles with Express Scripts, which has withdrawn from Walgreens.


WAG's share price was beaten down some when they departed ways with Express Script. In a bit of a panic they came up with a way to try and generate some of the revenue that had just walked out the door with Express Scripts' huffy exit. Great idea! They decided to buy Alliance Boots. The shares then got beaten down some more as the market decided they were paying too much, and, really, what was the point anyway?

But wait, there's more. At the end of July Express Scripts and Walgreen kissed and made up; they're back together! The stock price even bounced back. So all's well that ends well, except for perhaps that albatross around Walgreen's neck, that panicky rebound relationship with Alliance Boots, which may, or may not, cost them dear in the future.

And so it goes…

kelbon

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Author: horacekgl Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7549 of 8751
Subject: Re: Walgreen (WAG) Date: 10/3/2012 10:56 AM
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I've owned Walgreens since 1998. My annual rate of return, which of course includes dividends, works out to be (drum roll please) -- 4.91%

Stinks is what best describes that rate of return. I generally do not keep such in my portfolio, but I guess inertia is a terrible thing.

Everyone says Walgreens is about to grow again, but they've been saying that for years now.

The problem with Walgreens is competition. It used to be the best of pharmacy chains, opening up stores daily nationwide. Now with all the choices (starting with Walmart) they are merely an over-priced convenience store that fills prescriptions. CVS, once presumed to be dead, is now the clear leader in this type of pharmacy -- becoming what Walgreens once was.

Walmart, Sam's, Costco are my preferred order of prescription fillers. But I'd probably go to Shopright (a supermarket chain here) as soon as I would go to Walgreens or CVS.

So Walgreens even fails the Lynch test for me.

Gotta make a note. Next rebalance Walgreens must go.

glh

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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7553 of 8751
Subject: Re: Walgreen (WAG) Date: 10/3/2012 7:53 PM
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As dividend growers goes, they don't come much better than WAG. Consider the following data....

22.3% annual average dividend growth since 1986, which has been increasing, as the following dividend growth shows:

2011-12: 25% (if Nov dividend = Aug dividend)
2010-11: 28%
2009-10: 25%
2008-09: 21%
2007-08: 20%
2006-07: 21%
2005-06: 21%

Op FCF payout ratio has crept up slightly from 12% in 2008 to 18% over the past two years

Net (or sustainable) FCF payout ratio has gone from 20% in 2009 to 31% over trailing 12 months.

I look at a lot of dividend paying stocks, and frankly, I don't recall ever seeing stronger fundamentals in dividend growth.

But the real question is, can WAG keep it up?

Most of the anlysts I've read are concerned that the Express-Scripts debaucle is a harbinger of things to come, as downward competative pressure on drug prices continues and more retail outlets work their way into this market...particlularly those fathomless discounters like Costco and Walmart, where pharmceutical margins are thin and volume makes them profitable.

BruceM

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Author: DBrown7 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7554 of 8751
Subject: Re: Walgreen (WAG) Date: 10/4/2012 12:00 AM
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horacekgl,

I think the biggest problem with your poor returns since your 1998 purchase of WAG was likely the fact that WAG was very overvalued at the time. The earnings growth for at least the last decade has been pretty good. As for future growth, I have no prediction.

As Buffett has often stated, profiting on an investment depends on buying a good business at a reasonable price. If you feel WAG is still a good business, the price is much more reasonable than it was in 1998. If not, then it's probably time to look elsewhwere.

Don

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Author: iamski Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7603 of 8751
Subject: Re: Walgreen (WAG) Date: 10/28/2012 8:45 AM
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Next rebalance Walgreens must go.


If you don't like a stock, why on earth would you wait for rebalance time to get rid of it?

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