With a forward dividend yield in excess of 9%, Walgreens Boots Alliance (NASDAQ: WBA) definitely qualifies as a stock with a mouth-wateringly high annual cash return. But with its shares down by 45% over the past 12 months, it's clear that this isn't a stock to buy on a lark.

Is Walgreens still worth buying for its tempting annual payout despite its poor performance recently? Probably not, and here's why.

At the crux of Walgreens' riskiness as a dividend stock is its ongoing struggle to diversify beyond its core retail pharmacy business, which has long experienced sluggish growth. As most investors know, diversification into new segments can be a wonderful thing when it works, as it can create opportunities for synergies while also cushioning against certain headwinds. But spinning up new product lines costs a lot of money, and new ventures can take quite some time to become profitable.

Continue reading

Source Fool.com