I purchased 68 shares this morning @ 28.99 / share and a YOC of 3.8% before commissions. I also sold 2 Oct 20 ’12 $28 Puts @ 1.20/share. If the puts get assigned in Oct. I will own 268 shares of WAG at an average cost of 27.36 with a total YOC of 4.02% before commissions. I realized that with a lot of puts I have sold, I would have been better off buying the company so I decided to do both today. If WAG’s price rallies I don’t want to miss the opportunity to own some at a good price. Walgreens is a dividend champion and has raised dividends for 36 straight years.
I have been watching Walgreen’s (WAG) for a while and decided to pull the trigger today on weakness. The stock has dropped about 10% since it announced it is buying a 45% stake in Alliance Boots for 6.7 Billion (4B in cash plus 83.4M shares). I’m guessing this drop was due to dilluting the outstanding shares by about 10% (they have about 850M outstanding shares by my calculations). WAG also increased the dividend 22.2% to 27.5 cents per share yesterday.
I had planned on holding off on any new purchases until July but I missed out on some deals a few weeks ago and I can’t let this great deal slip away.
This is from their website:
DEERFIELD, Ill., June 19, 2012 – The board of directors of Walgreen Co. (NYSE:WAG) (NASDAQ:WAG) today announced an increase in the quarterly dividend of 22.2 percent to 27.5 cents per share from the previous rate of 22.5 cents per share. The dividend declared by the board is payable Sept. 12, 2012, to shareholders of record Aug. 17, 2012. The increase raises the annual dividend rate from 90 cents per share to $1.10 per share.
Here is an update of my open options:
Open:
03/12/12 Sold 1 AZN Oct 20 ’12 $45 Put @ 3.00
03/28/12 Sold 3 BBVA July ’21 ’12 $7 Puts @ .55
04/09/12 Sold 1 VOD July 21 ’12 $27 Put @ 1.45
04/30/12 Sold 1 PG July 21 ’12 $62.50 Put @1.42
06/20/12 Sold 2 WAG Oct 20 ’12 $28 Puts @ 1.20
I like this move. Well done.
Interesting purchase. I’ve been watching WAG for some time, but I haven’t been motivated enough to buy it. However, if its stake in Alliance Boots has positive results and it recovers from the Express Scripts issue, then it could do very well going forward. The large dividend increase just announced is encouraging.
Out of curiosity, with the recent drop in the price of PG, were you assigned shares?
Thanks for commenting. I like WAG’s dividend growth and I think they can overcome their obstacles, time will tell.
As for my PG put that I sold, I have not been assigned shares yet. I’m definitely in danger of being assigned shares early with the price drop. I have enough cash in my options account to cover this should it happen. My portfolio would definitely be overweight with PG but I’m going to be aggressively building it the second half of this year and next year. Should PG get assigned, it will be the first stock that I won’t leave on automatic DRIP.
I am in the UK but hold a number of US stocks and WAG is one of them. Glad to see you have purchased it.
Hi bamboo investment,
Thanks for stopping by. I’m looking for dividend growth and I believe WAG will provide it long-term. I’d love to hear your thoughts on it. Your website also looks interesting, I’ll have to check it out more later.
Wow I didn’t realize WAG was yielding that much. I knew it had very high dividend growth, but last I remember it yielded around 2%. I’ll have to look into it. Good stuff.
Hey CI,
Thanks for stopping by. Between a lower price and a big dividend increase (22%), their yield has increased over a full percentage point. There are a few concerns, namely express scripts and alliance boots, but I think they will still do well long-term.
Up 13% this morning. July 19. Bought two weeks back and already up 17%.
$25,000 dividends
yeah, looks like we both made good buys.