If You Invested $5,000 in Walgreens Stock in 2012, This Is How Much You Would Have Today

Buying shares of extremely dependable companies that generate fats money flows 12 months after 12 months is a time-tested technique of among the world’s most profitable buyers, together with the likes of Warren Buffett. And whereas the Oracle of Omaha would not personal any shares of the nationwide pharmacy chain Walgreens Boots Alliance (WBA -5.36%), many buyers do, and sometimes with combined outcomes. 
If you are contemplating making a purchase order, it is smart to look again on the pharmacy’s long-term efficiency to get a sense for what position it’d fill in your portfolio. Let’s check out this firm’s enterprise mannequin and calculate how a lot you’ll have made for those who invested $5,000 in it 10 years in the past.

You would most likely remorse your prior funding in this inventory
Not each inventory is correct for each investor, and for those who determined to purchase Walgreens round a decade in the past, there is a stable probability that you simply’re now feeling as if it wasn’t the correct transfer for you. 
On Oct. 1, 2012, Walgreens’ split-adjusted inventory value closed at $35.23. That means for those who purchased the inventory then and held it till the primary of this month, you would be a complete return of almost 12% — a pittance in comparability to the efficiency of an index fund just like the market-tracking SPDR S&P 500 ETF, which returned almost 199% in the identical interval. Keep in thoughts the whole return contains every little thing from share value appreciation to inventory buybacks and dividend funds, so Walgreens was strictly a worse funding than shopping for the S&P 500 over roughly the final 10 years. 
In greenback phrases, your $5,000 funding in Walgreens would have returned a complete of $5,600. On the intense aspect, you’d have achieved even worse for those who invested in Rite Aid, one among Walgreens’ pharmacy rivals; it has posted a damaging complete return of 78.6% since late 2012.
How to method investing in this inventory at this time
But what does all of this imply for buyers at this time, particularly when contemplating the previous chestnut that previous returns do not predict future efficiency? In quick, you most likely should not be shopping for Walgreens with the concept it is a progress inventory that’ll be rising in worth with each passing 12 months. After all, its trailing-12-month (TTM) income solely elevated 11.7% in the final 5 years, reaching above $134.5 billion, and it is not affordable to count on that tempo to vary by a lot.
There will not doubtless be a sudden surge in enterprise to Walgreens’ pharmacies, nor will its shopper well being items begin to promote quickly. Furthermore, it is onerous to think about new income initiatives able to considerably revitalizing the inventory. While its new Walgreens Health fast care clinics seem like gaining traction and rising quickly as a income section, producing $596 million in gross sales throughout fiscal Q3, it hasn’t but been sufficient to drive a lot of something in the way in which of top-line progress.
So, as a substitute of investing for value appreciation, take into consideration this enterprise as a dividend-paying firm that is confirmed it will probably reliably function in a comparatively low-growth area of interest (retail pharmacies) whereas remaining financially steady over time. Right now, the inventory’s ahead dividend yield is above 6.1%, which is sort of excessive, and Walgreens continues to hike its payout, with its dividend rising by greater than 74.5% since This autumn of 2012. At that yield, your $5,000 funding at this time might produce round $305 in passive revenue yearly.
That won’t sound like a lot, however it might be a useful addition to your different passive money flows, and you might additionally decide to construct up your place over time to yield extra money. You’d additionally doubtless get the advantage of extra dividend hikes, although most likely at roughly the identical gradual tempo as in latest instances. Alternatively, it is onerous to go flawed with an funding in an index fund, and it is doubtless that such an funding will outperform Walgreens over the approaching years even when it will not produce a lot in the way in which of dividend revenue.

Alex Carchidi has no place in any of the shares talked about. The Motley Fool has no place in any of the shares talked about. The Motley Fool has a disclosure coverage.

https://www.fool.com/investing/2022/10/07/if-you-invested-5000-in-walgreens-stock-in-2012/

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