Walgreen Co. on Wednesday raised its quarterly dividend 27 percent to 17.5 cents a share, topping its compound annual dividend growth rate of 24 percent in the past six years. Last year, the drugstore chain raised its dividend 22 percent and set a long-term dividend payout target of 30 percent to 35 percent of net earnings.
Walgreen, which has increased its dividend in each of the past 35 years. is “confident in our growth strategies and our ability to generate strong free cash flow in the future,” said President and Chief Executive Greg Wasson.
The increase means Walgreen will pay out an additional $146 million a year.
It has paid a dividend in 311 consecutive quarters, or more than 77 years.
According to Standard & Poor’s, 251 companies increased their dividends in the second quarter, up 71 percent from a year earlier, when companies were holding on to their cash during the recession.
Last month, Walgreen reported its earnings fell 11 percent, hurt by the elimination of a tax benefit because of the health-care overhaul, costs from its acquisition of Duane Reade and weakened consumer spending. The sluggish economy has been a challenge for Walgreen and other retailers as consumers have cut their budgets for discretionary items.
Walgreen, like some of its competitors, is looking for fresh ways to get consumers into stores and increase their spending. Its latest effort to do that is a store remodeling plan, dubbed Customer Centric Retailing, which is intended to help make stores more customer friendly by lowering shelf heights and better targeting inventory.
Shares recently traded at $29.32, up 0.7 percent. The stock is down 20 percent this year.
