Drugstore chain Walgreen Co. said Wednesday it is boosting its quarterly dividend by 27 percent to 17.5 cents from 13.75 cents as a sign of confidence in its growth and free cash flow.
The Deerfield, Ill., company will now pay dividends of 70 cents each year, up from 55 cents. Based on about 973 million shares outstanding, the payout will cost Walgreen roughly $170 million annually.
President and CEO Greg Wasson said the boost extends its track record of yearly dividend increases, which now total 35 consecutive years.
Walgreen is the biggest drugstore operator in the U.S. It runs 7,541 stores nationwide and has opened or bought more than 600 stores over the last year.
Earlier this month, Walgreen said sales at stores open at least one year rose 2 percent in June. The measurement is a key indicator of retailer health, and Walgreen's result was better than analysts had expected. Last month the company said its profit fell 11 percent in the fiscal third quarter because of greater expenses related to health care costs for retired employees, and because of the company's acquisition of New York City drugstore chain Duane Reade.
In June the company clashed in public with CVS Caremark Corp. The Caremark business pays Walgreen to fill prescriptions, and Walgreen complained about Caremark's rates and about Caremark policies. Walgreen and Caremark nearly stopped doing business together but ultimately settled their differences.
The dividend is payable Sept. 11 to shareholders of record on Aug. 19.
Shares of Walgreen rose 28 cents to $29.39 in afternoon trading.
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