Dividend cut raises concerns about Walgreens’ future in the Dow Jones Industrial Average
- Walgreens dividend cut could lead to its removal from the Dow Jones Industrial Average
- Walgreens has the lowest share price and smallest market capitalization among Dow components
- Possible candidates for admission to the Dow include Alphabet and Amazon
- Other potential removal candidates besides Walgreens are Travelers, Verizon, and Intel
The recent dividend cut at Walgreens Boots Alliance has raised concerns about the company’s position in the Dow Jones Industrial Average. With the lowest share price and smallest market capitalization among Dow components, Walgreens is considered the most vulnerable for removal from the index. Since joining the Dow Industrials in June 2018, Walgreens’ stock has declined by about 65%. The dividend cut, which was anticipated by analysts and investors, has further impacted the stock, causing a 6.8% drop. Potential changes to the Dow Industrials this year could include the addition of Google parent Alphabet and Amazon.com. Other candidates for removal, along with Walgreens, are Travelers, Verizon Communications, and Intel. The decision to remove or add components to the Dow is based on various factors, including market value and stock price. The Dow’s price weighting system, which dates back to 1896, gives higher-priced stocks more weight in the index. This means that Walgreens, with its low stock price, has significantly less impact on the Dow compared to higher-priced stocks like UnitedHealth Group. The last change in the Dow Industrials occurred over three years ago, and the current stretch without a component change is the longest since 2015. Alphabet and Amazon, with their high stock prices, have the potential to make a significant impact on the index if added. On the other hand, Intel and Verizon, with their low stock prices, have minimal effect on the Dow. Travelers, despite its smaller market value, has more impact due to its higher share price. The final decision on Dow component changes rests with S&P Dow Jones Indices, which does not comment on potential changes.
Public Companies: Walgreens Boots Alliance (WBA), Google parent Alphabet (GOOGL), Amazon.com (AMZN), Berkshire Hathaway (BRK.A), Tesla (TSLA), Travelers (TRV), Verizon Communications (VZ), Intel (INTC)
Private Companies:
Key People:
Factuality Level: 7
Justification: The article provides information about the dividend cut at Walgreens Boots Alliance and its potential impact on the company’s position in the Dow Jones Industrial Average. It also discusses possible changes to the index and the criteria used for selecting and weighting components. The information presented is mostly factual and based on market data. However, there is some speculation about potential candidates for admission and removal from the index.
Noise Level: 3
Justification: The article provides some relevant information about the dividend cut at Walgreens and its potential impact on the Dow Jones Industrial Average. However, it lacks in-depth analysis and fails to provide evidence or data to support its claims about potential changes to the index. Additionally, the article includes irrelevant information about the stock prices of other companies and the history of component changes in the Dow Industrials.
Financial Relevance: Yes
Financial Markets Impacted: The dividend cut at Walgreens Boots Alliance could impact the company’s stock price and potentially lead to its removal from the Dow Jones Industrial Average. Changes to the Dow Industrials components could also impact the stock prices of potential candidates for admission, such as Google parent Alphabet and Amazon.com.
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the potential impact of the dividend cut at Walgreens Boots Alliance on the company’s position in the Dow Jones Industrial Average. While this event may have financial implications, it does not describe an extreme event.
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