The S&P 500 is an index of 500 of the biggest publicly traded companies in the United States. It’s commonly used as a way to gauge the overall health of the stock market. While the S&P 500 has been doing extremely well overall in recent months, not all members are having the same success. Two of its members are struggling, and now may be the right time to sell those stocks.
Walgreens Boots Alliance (NASDAQ: WBA)
Walgreens Boots Alliance was formed in 2014, when leading US pharmacy chain Walgreens acquired Alliance Boots, a European health and beauty conglomerate. The company’s stock hit an all-time high in 2015, but is now down by nearly 90%. After 47 straight years of Walgreens dividend raises, the quarterly payout has now been slashed in half.
Walgreens remains the largest chain of retail pharmacies, but it’s battling headwinds beyond its control. Pharmacy benefit managers (PBMs) control how much reimbursement pharmacies receive from insurance companies when filling prescriptions, and one of the three largest PBMs is owned by rival CVS Health. All three have their own mail-order pharmacies, creating plenty of reason to disincentivize customers from going to Walgreens. Unless a long-shot lawsuit by the Federal Trade Commission (FTC) against the PBMs actually succeeds, it will be tough for Walgreens to dig out of this hole.
Medical Properties Trust (NYSE: MPW)
Medical Properties Trust is a real estate investment trust (REIT) with more than 400 medical properties in its portfolio. Most are hospitals and clinics in the United States, with a few locations around the globe. There are 53 different rent-paying operators, most of which are on net leases that make the tenant responsible for taxes, maintenance, and other building operation costs.
The company’s business model is airtight, as long its tenants responsibly pay. Unfortunately, its biggest tenant, Steward Health Care, is in crisis. Steward is currently under DOJ investigation after filing for Chapter 11 bankruptcy. It has keys to more than 18% of Medical Properties Trust’s assets, but only contributed 3.9% of revenue as of March. The company has been forced to sell off non-Steward properties in its portfolio, creating a shrinking pool of available revenue. It’s had to cut dividends, though falling stock prices means it’s still paying a hefty 12.8% yield. But unless something drastic happens, it’s likely to face further dividend cuts. As a result, this may be the right time to sell off shares of Medical Property Trust.
Neither Lisa Fritscher nor Stocks.News have positions in either of these companies.
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Contributing Writer
Lisa Fritscher has been a contributing writer for App.Stock.News since 2024. Lisa has been interested in investing since winning The Stock Market Game in high school. In more than a decade as a professional writer, she has written consumer-facing financial information and advice articles for a wide variety of publications. She has a Bachelor of Arts in Psychology from the University of South Flori...