Drugstore chain Walgreens cuts quarterly dividend to get more cash to grow its business

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Walgreens is chopping its dividend nearly in half as the drugstore chain looks to strengthen its balance sheet

Walgreens is chopping its dividend nearly in half as the drugstore chain looks to strengthen its balance sheet.

The health care giant said Thursday that reducing its quarterly payout to shareholders to 25 cents per share will help free up capital to spend growing its pharmacy and health care businesses.

New CEO Tim Wentworth said in a statement that company leaders believe such growth “will ultimately improve shareholder value.”

The new dividend compares to a 48 cents per share payout the company announced in October.

Edward Jones analyst John Boylan said the dividend cut was a necessary move.

“However, this is just another step in the financial healing process, and seeing predictable and sustained growth may take time,” he said in an email.

Walgreens also announced on Thursday a better-than-expected fiscal first quarter.

Walgreens Boots Alliance Inc. runs a network of around 13,000 drugstores globally. Most of its locations are in the United States, where its locations are becoming growing sources for care.

The company is working with VillageMD to open primary care practices next to some locations with the idea that drugstores and doctor offices work together to help keep patients healthy. But drugstores remain Walgreens’ main business.

Walgreens, like other drugstores, has struggled with a drop in COVID-19 vaccines and testing, tight reimbursement for prescriptions and pharmacy staffing shortages. The company also is pushing to grow its health care business, a segment that analysts say will take time to develop and turn profitable.

Wentworth said in the company’s earnings statement Thursday that Walgreens is