Walgreens Boots Alliance, Inc. (WBA)| Daily Alert June 28
Our income recommendation for 2021 was Walgreens Boots Alliance. The stock has done well, generating total returns (including dividends) of 39.0% this year (through 6/14/21) versus 14.1% for the S&P 500 ETF (SPY).
And Walgreens as a company has not stood still in 2021. The company changed CEOs on March 15th when Rosalind Brewer succeeded previous CEO Stefano Pessina. Walgreens also closed on its sale of the majority of its Alliance Healthcare business for ~$6.5 billion to AmerisourceBergen (ABC). The company is using proceeds to eliminate $3.3 billion in debt from its balance sheet and for investment and growth purposes.
Finally, the company issued guidance for mid-to-high single digit growth for adjusted earnings-per-share for fiscal 2021.
The news surrounding Walgreens has been largely positive in 2021. As a result of price gains, the stock’s dividend yield has fallen from 4.5% during our initial writeup to around 3.4% now.
We now view Walgreens as a quality Dividend Aristocrat that is trading at a small premium to our fair value estimate. Walgreens is a long-term hold at current prices.
Disclosure: I am long WBA.
Ben Reynolds, Sure Dividend Newsletter, suredividend.com, firstname.lastname@example.org, 800-531-0465, June 15, 2021
*Signet Jewelers (SIG)
With sales of more than $6 billion, the company operates 2,800 stores, including Kay Jewelers, Zales, Jared and others.
With the turnaround, Signet is becoming much more relevant, profitable and valuable.
The most recent quarter produced profits that were sharply higher than estimates and the company raised its full-year profit guidance by nearly 50%.4
The CEO leading the turnaround has focused on the basics: expand the company’s marketing to reach current and potential new customers, offer products that customers want, and make the buying process easy.
One intangible is that Signet’s digital/social media upgrade may be polishing up some of the reputational tarnish of its mall-based stores, such that new customers in prime, higher-income demographic groups are now comfortable with buying from the company.
Signet’s profits and balance sheet are robust. The share valuation remains depressed despite the price run-up.
We continue to like SIG shares.
Bruce Kaser, Cabot Undervalued Stocks Advisor, cabotwealth.com, 978-745-5532, June 22, 2021
*Crown Castle International (CCI)
The stock of cell phone tower and data center REIT Crown Castle is not the screaming value that it was last fall, but it does retain its appeal as a best-inclass company that delivers reliable dividend growth and consistent increases in sales and profits.
Crown Castle grabbed a big piece of business from Verizon in the first half of 2021, and funds from operations grew 20% year-over-year in the most recent quarter. Revenue this year is expected to grow 7.5% to $6.28 billion.
The ongoing rollout of 5G wireless service is a significant tailwind for CCI and its two primary competitors in the tower business: American Tower (AMT) and SBA Communications (SBAC).
Crown Castle has outperformed its rivals in market performance, with a 24% year-to-date total return through June 16, compared to AMT’s 19% and 13% for SBAC.
Crown Castle has taken advantage of the stock’s strength and the favorable business environment to raise additional capital on advantageous terms by issuing both equity and debt. The most recent transaction was the issue of $750 million in 2.50% senior notes due 2031.
The stock is still attractive for long-term investors at current prices near $193. Waiting for a pullback to the 50-day moving average of $185 would get you into the stock at a yield just shy of 2.9%.
John Dobosz, Forbes Dividend Investor, newsletters.forbes.com, 212-367-3388, June 22, 2021
*Altria Group, Inc. (MO)
Altria is up an impressive 20% in the first 6 months of the year and on a roll that we believe will continue. MO pays a handsome/safe dividend and the company raised the dividend this year—just like it does every year.
I believe by 2024-2025 MO will be selling POT/sticks right next to the Marlboros. Marlboro is still king of the smokes. States received $27 Billion in tax revenue from smokes last year. Of those funds, a (PITIFUL) 2.4% went to smoking cessation programs; the rest to support the state budgets. In most states tobacco revenues pay for 8-10% of the budget.
It is estimated-about 320 Million people smoke (globally). That number is up about 90 million in the last 30 years. While less people percentage-wise smoke these days, the total number of smokers is still growing.
MO will soon start selling iQOS (vape) products made by sister company PM—which has been a big hit. We note that iQOS product-has higher margins than cigarettes.
The stock is still cheap under $50 especially, and for those looking for total return, MO makes sense.
Bob Howard, Positive Patterns, P.O. Box 310, Turners, MO 65765, 417-887-4486, June 4, 2021