DOW JONES NEWSWIRES
Walgreen Co. (WAG) increased its quarterly dividend by 22%,
saying it is confident in its "ability to generate strong free cash
flow in the future."
The increase is expected to cost the largest drugstore chain in
the U.S. by revenue to raise dividend payments by $99.2
million.
Walgreen will pay a dividend of 13.75 cents in September.
The company has paid a dividend in 307 straight quarters, or
more than 76 years, and has raised its dividend for 34 consecutive
years. The increase has averaged more than 21% annually for the
past five years.
While many companies have slashed their dividends during the
recession, some - packaged-foods maker General Mills Inc. (GIS),
oil giant Exxon Mobil Corp. (XOM), tech giant International
Business Machines Corp. (IBM) and drug maker Johnson & Johnson
(JNJ) among them - have continued to raise them. Standard &
Poor's recorded an all-time low of 233 payout enhancements
(including hikes, extras and resumptions) in the second quarter
among about 7,000 publicly owned corporations it surveys, down
almost half from a year ago.
Last month, Walgreen said its fiscal third-quarter earnings
dropped 8.7% as falling margins offset growth in revenue and
prescription sales.
A pullback in consumer spending has exacerbated the pressure
that drugstore chains already felt from weaker prescription-drug
sales and increased competition.
Walgreen has been slowing its previous breakneck growth,
reducing store openings and cutting jobs. The company also has been
putting a greater emphasis on staples like groceries and pushing
its private-label products.
Walgreen's shares rose 0.8% to $29.99 in after-hours trading.
The stock has climbed 40% in the past nine months.
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357;
Kathy.Shwiff@dowjones.com