Investing.com -- Shares of Walgreens Boots Alliance, Inc. (NASDAQ:WBA) tumbled 6% today following the company's announcement that it has suspended its quarterly dividend. The move comes as part of the company's efforts to strengthen its balance sheet and support a retail pharmacy-led turnaround.
In a recent press release, Walgreens stated that the suspension of the dividend, which had been $0.25 per quarter, is aimed at reducing debt and improving free cash flow. The decision was influenced by the company's need to allocate capital towards litigation and debt refinancing over the next few years. This strategic shift is seen as a necessary step in Walgreens' long-term plan to revitalize its business model and ensure sustainable growth.
The company's leadership emphasized its commitment to executing strategic priorities and maintaining financial discipline. Walgreens believes these actions will lead to sustained value creation for its stockholders over the long term.
The suspension of the dividend marks a significant change in the company's capital allocation policy, which has traditionally included regular payouts to shareholders. The news has evidently raised concerns among investors, leading to the decline in Walgreens' stock price during today's trading session.
Walgreens Boots Alliance has not provided a timeline for when the dividend might be reinstated, indicating that the board of directors will continue to evaluate the company's financial strategies in conjunction with its broader turnaround efforts. The company's focus on improving its economic model and reducing debt is a clear signal that management is prioritizing financial health and operational efficiency over short-term shareholder returns.
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