Walgreen Dividend Stock Analysis

Walgreen Co. (WAG), together with its subsidiaries, operates a network of drugstores in the United States. This dividend champion company has paid a dividend since 1933 and increased it for 39 years in a row.

Over the past decade this dividend growth stock has delivered an annualized total return of 9.10% to its shareholders.

The company has managed to deliver an 8.40% average increase in annual EPS over the past decade. Walgreen is expected to earn $3.32 per share in 2014 and $3.87 per share in 2015. In comparison, the company earned $2.56/share in 2013. In the press release from Walgreen from yesterday, the company mentioned that it expects earnings per share to hit $4.25 - $4.60 by 2016.

Between 2004 and 2012 Walgreen has been able to reduce the number of shares from 1.032 billion to 880 million through consistent share buybacks. The acquisition of 45% of Alliance Boots increased number of shares outstanding to 955 million in 2013, and this figure is expected to increase further through 2015 due to the purchase of remaining interest in AB. The company’s Board of Directors also approved a new $3 billion stock buyback through 2016.

Currently Walgreen is attractively valued at 17.80 times forward earnings and a yield of 2.30%. Either way, I took advantage of the huge sell-off after Alliance Boots acquisition news and added a small number of shares to my existing position. I would be more interested in the stock on dips below $54/share.

Check the full stock analysis at Seeking Alpha

Full Disclosure: Long WAG, WMT

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