WAG raises dividend 22%

Walgreen Company’s (WAG) board of directors today announced a 22% increase in the quarterly dividend to 13.75 cents a share from 11.25 cents a share. This marks 34 consecutive years of dividend increases in Walgreen's 76 years of dividend payment history.

This will put WAG’s payout ratio at about 26%, which is a slight increased from 21% previous quarter, while holding the income before extra ordinary items constant.In an environment where we mostly hear about dividend cuts, this news was welcomed by investors, and WAG finished up 3.12% for the day (and is trading as much as 0.8% up in after market trading).

WAG is weathering the storm relatively well, even though we've seen recent earnings number slightly miss the expectation. (See Peter's post for recent earnings release: http://acrinv.blogspot.com/2009/06/walgreen-wag-trades-lower-after.html)

By slowing down new store openings, rejuvenating existing stores, and focusing on inventory control, WAG’s is making an effort to reduce costs during a period of depressed consumer spending and setting itself up for stronger turnaround. WAG's main line of businesses, prescription drugs and consumer staple items, are also a better positioned area to hold up well during downturn.



Minjung Son