Intel has suspended its dividend, and this stock could be the next to stop paying its high yield

Dividend cuts and suspensions can often come without warning. While investors may have suspicions that a company will change its dividend, there is no sure-fire formula for determining when that might happen.

But there are certainly warning signs that can help investors assess overall risk. When Intel (INTC -2.29%) announced it was suspending its dividend in August may have caught income investors off guard. However, given the company’s aggressive growth strategy and its weak financials, a dividend cut or suspension shouldn’t have been all that unexpected — the writing was on the wall.

This is how I feel about another stock right now: Walgreens Boots Alliance (WBA -0.74%).

Walgreens could follow in Intel’s footsteps

Drugstore retailer Walgreens doesn’t make chips, but it has an expensive growth strategy of its own that includes delving into health care with the launch of hundreds of primary care clinics. This has come as the company faces increasing competition from the online retail giant Amazonwhich made it easier for patients to order pills and have them delivered right to their doorstep. Instead of going to your local Walgreens, you can have Amazon deliver your medication — in some markets, it can be delivered the same day as your order.

Given the competition and the huge need for cash to grow its healthcare business, Walgreens is in a troubling situation. There are signs the business could be looking to take drastic action under new CEO Tim Wentworth. He already cut the company’s dividend earlier this year, and Walgreens is still looking at asset sales to help free up some cash flow.

There are even rumors that Walgreens may divest its entire stake in primary care company VillageMD, which has long been key to its healthcare strategy. Such a move would suggest a drastic change in the company’s overall growth strategy. If Walgreens is considering this kind of move, then another dividend cut or suspension altogether is likely.

Where Walgreens differs from Intel

Unlike Intel, which appears poised to grow its foundry business, Walgreens appears to have a more questionable future ahead of it — and there may be more cards it’s willing to play than cutting or suspending its dividend. From selling businesses to reducing the number of stores, there are many different levers the company could pull that could help strengthen its financial position and potentially avoid the possibility of suspending its dividend, which today has yields close to 10%.

With a new CEO who is willing to consider all options, there is hope that Walgreens can still find a way to turn things around, but it certainly won’t be easy. The business is struggling to grow and its margins have been unimpressive, to say the least.

WBA Profit Margin (Quarterly) from YCharts.

Investors should not rely on Walgreens’ dividend

For decades, Walgreens has been a top dividend growth stock. This changed this year with the dividend cut. This is no longer a stock that investors should be comfortable with for its dividend. Walgreens is more than just a risky stock; this is a business with a largely uncertain future. As a result, income investors should consider looking elsewhere for a good dividend.

At this stage, Walgreens may represent a risky contrarian option, but not much else. It’s a turnaround piece that can have a lot of upside if Wentworth is able to pull off a huge business turnaround. But it won’t be easy and, to say the least, it can be an extremely bumpy ride for investors.

The days when Walgreens was seen as a safe stock to own are long gone, and its lower valuation doesn’t change that fact. If you don’t have a high risk tolerance, it’s better to go with other stocks.