Exploring Dividend Stocks: Avoid Walgreens Boots Alliance and Consider a Better Option

Investors often turn to dividend stocks to find a reliable source of income. However, it is essential to assess the sustainability of these dividends. Companies like Walgreens Boots Alliance may be higher risk due to their high payout ratios, which may indicate that they are paying out more dividends than they can afford.

Top 10 Dividend Stocks in the United States

Name	Dividend yield	Dividend Rating
Columbia Banking System (NasdaqGS:COLB)	7.24%	★★★★★★
Resource Connection (NasdaqGS:RGP)	5.07%	★★★★★★
OceanFirst Financial (NasdaqGS: OCFC)	5.03%	★★★★★★
Silvercrest Asset Management Group (NasdaqGM:SAMG)	4.87%	★★★★★★
Financial Regions (NYSE:RF)	4.79%	★★★★★★
Dillard’s (NYSE:DDS)	4.77%	★★★★★★
Huntington Bancshares (NasdaqGS:HBAN)	4.70%	★★★★★★
CompX International (NYSEAM:CIX)	4.86%	★★★★★★
Carter’s (NYSE:CRI)	5.16%	★★★★★☆
Credicorp (NYSE:BAP)	5.66%	★★★★★☆

Click here to see the full list of 207 stocks in our Best Dividend Stocks Analysis tool.

We’ll take a look at one of the top picks in our screener and one that could be a dividend trap.

The best choice

Peoples Financial Services (NasdaqGS:PFIS)

Simply Wall St Dividend Rating: ★★★★☆☆

Preview: Peoples Financial Services Corp., with a market capitalization of approximately $321.39 million, serves as the bank holding company for Peoples Security Bank and Trust Company, offering a range of commercial and retail banking services.

Operations: The company generates its revenue primarily through banking services, totaling approximately $96.88 million.

Dividend yield: 3.6%

Peoples Financial Services maintains a stable dividend history, paying dividends consistently over the past decade, with recent statements maintaining the quarterly dividend at US$0.41 per share. Despite a lower yield of 3.6%, the company’s payout ratio of 49.9% suggests that dividends are well covered by earnings, contrasting positively with companies with unsustainable payout ratios. However, recent financial reports indicate a decline in net income and interest income year over year, which could prompt caution regarding future sustainability.

To be reconsidered

Walgreens Boots Alliance (NasdaqGS:WBA)

Simply Wall St Dividend Rating: ★★☆☆☆☆

Preview: Walgreens Boots Alliance, Inc. is a global healthcare, pharmacy and retail company with operations in the United States, United Kingdom, Germany and other countries, with a market capitalization of approximately 10 .44 billion dollars.

Operations: The company generates revenue through its international segment of $23.37 billion, its U.S. healthcare segment of $8.21 billion and its U.S. retail pharmacy segment of $113.97 billion.

Dividend yield: 8.3%

Walgreens Boots Alliance faces challenges as a dividend stock to avoid, primarily due to its unprofitable status and lack of free cash flow, making its high dividend yield of 8.27% unsustainable. Over the past decade, dividend payments have been volatile and poorly covered by earnings or cash flow, indicating potential risk for future payouts. Recent financial problems include a significant net loss reported in the third quarter of 2024, as well as stalled plans to sell or IPO its Boots chain, further complicating its financial outlook.

Key takeaways

• Check out the 207 names in our Top Dividend Stocks filter here.
• Already own some of these companies? Bring clarity to your investment decisions by connecting your portfolio to Simply Wall St, where you can monitor all of your stocks’ vital signs effortlessly.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

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