Dividend Stocks to Sell: WAG Stock
Walgreen Co. (WAG) is not in danger of going bankrupt. WAG stock has plenty of cash, it turns a sizable profit, and it generates plenty of free cash flow. So what’s the big deal? Why am I suggesting you sell this stalwart among dividend stocks? Because drugstores like WAG stock are what I call a “sunset industry”.
This isn’t some growing new industry set to take the world further into the 21st century. It’s an old concept that hasn’t innovated, won’t innovate, and will slowly but surely die out over this century. When I walk into a Walgreens, I see a miniature Target (TGT), a more expensive Dollar Tree (DLTR), and a provider of prescriptions in a world where everything is becoming mail order.
Even if you say I’m crazy and that people will always use drug stores, I’ll say you are crazy for paying 18.5 times estimates on a company growing FY14 EPS by only 11%. If you need a 2.1% yield that badly, I refer you to AT&T (T), where you can buy an overvalued stock with better FCF and a dividend with a much higher 5.7% yield.