I think dividend payers will outperform in 2023. I also think healthcare-related stocks will outperform in 2023, suggests Chuck Carlson, dividend reinvestment specialist and editor of DRIP Investor.
One attractive dividend payer within the healthcare space with big rebound potential in 2023 is Walgreens Boots (WBA). Admittedly, Walgreens has not exactly been a stellar stock in recent years, including a subpar performance in 2022. However, I think things might be changing for the better for the company:
* Healthcare related stocks should show above-average relative strength in 2023, which works to the advantage of Walgreens. Indeed, the company’s transformation into a major health-care services provider seems to be gaining traction.
The company has been expanding here via acquisitions, including the recent majority share acquisition of CareCentrix. CareCentrix is a leading independent platform that coordinates care to the home for health plans, patients, and providers. The deal accelerates Walgreens’ capabilities in delivering health care across a spectrum of settings, including primary care, specialty pharmacy care, post-acute care, and home care.
* The firm is removing a major uncertainty concerning its lingering opioid litigation with the recent proposed settlement of $4.95 billion to be paid over a 15-year period.
* A potential positive catalyst would be the sale of its Boots United Kingdom business. The firm has contemplated a sale of this unit in the past, and those talks could be revived with more accommodating debt markets.
* The stock’s current dividend yield of 4.7% is especially tasty, and I expect dividend payers to outperform the broad market in 2023.
To be sure, I’ve been a long-time owner of Walgreens and have been fooled before by the stock. But the stock appears to be discounting a lot of bad news and should be able to beat expectations. For investors looking for a rebound candidate in a segment (dividend-paying healthcare stocks) that should do well in 2023, Walgreens fits the bill.
Please note that Walgreens Boots offer a direct-purchase plan whereby any investor may buy the first share and every share directly from the company. Shares may also be purchased via any brokerage firm.