Want $1,000 in dividend income? Here’s how much you should invest in Walgreens stock

We can’t say that the healthcare sector is a hotbed of high-yielding dividend stocks. However, it exists Walgreens Boots Alliance (WBA 0.92%)with its dividend yield just below 10%.

There’s a catch here, though — the drugstore chain operator’s stock significantly underperformed the benchmark S&P 500 index lately, falling almost 60% in price since the beginning of this year. So we have to characterize Walgreens stock as high risk. For those willing to take a chance, here’s a look at how many shares it would take to record a $1,000 annual dividend from the company.

Still a high-yielding dividend, even after a deep discount

Walgreens’ current payment is actually a significant reduction from previous levels. In early 2024, the company announced a dividend cut of nearly 50%, reducing its quarterly payout to $0.25 per share from its predecessor’s $0.48.

Assuming management doesn’t cut it before the end of this year, that $0.25 per share is even $1 annually. This makes our math easy (yay!) — an investor would need 1,000 Walgreens shares to earn that $1,000.

I must point out here that Walgreens is a high risk investment given the current state of the company. Management has acknowledged that nearly a quarter of its more than 8,000 U.S. stores are unprofitable, and a push to build in-store medical clinics is a costly undertaking that may not yield significant returns. Revenue growth hasn’t been impressive lately, and the company has posted more quarterly net losses than profits over the past year.

High return meets high risk

While Walgreens has many strengths it can leverage, such as its strong name recognition in the U.S. market and that ubiquity, it feels like a bloated enterprise that needs the right kind of pruning. I doubt that storefront clinics are the answer — Americans tend to trust their regular doctors more — or that only closing unprofitable outlets will solve the problem. I don’t think this stock is a buy, no matter how juicy and tempting that high-yielding dividend is.