June 28, 2018 / 8:55 PM / in 20 days

Walgreens debuts as dog of the Dow

(Reuters) - The debut of Walgreens Boots Alliance Inc (WBA.O) into the Dow Jones Industrial Average Index .DJI this week marks the worst performance of any new entrant in the past 10 years, a Reuters analysis shows.

FILE PHOTO: A customer walks out of a Walgreens pharmacy store in Austin, TX, U.S., March 26, 2018. Picture taken on March 26, 2018. REUTERS/Mohammad Khursheed/File Photo

The announcement that Amazon.com Inc (AMZN.O) would acquire online pharmacy PillPack sank shares in Walgreens and other drug retailers on Thursday.

Walgreens shares were down more than 11 percent in the three days after the company replaced General Electric Co (GE.N) in the index on Tuesday.

(Graphic: Three-day share price performance following a Dow debut tmsnrt.rs/2Kr8hJk)

The No. 2 U.S. pharmacy chain by market cap lost 9.9 percent on Thursday, becoming the day’s biggest loser of the 30 stocks that comprise the Dow. It trimmed more than 44 points off the index, which shrugged off early losses to close the day up 98 points, or 0.4 percent.

While Walgreens performed like dog on debut, it would not today qualify as one of the “Dogs of the Dow,” under an investment strategy based on selecting 10 Dow stocks at year end with the highest dividend yields.

Walgreens’ annual dividend is 2.4 percent, above the S&P average yield of just under 2 percent, but below the 10 actual “Dogs” with yields above 3 percent.

GE shares have risen more than 8 percent since the company was dropped from the Dow, giving it the best three-day performance among those that recently left the index.

GE left the Dow with the lowest share price and least amount of influence in the index, which is derived from an average of stock prices among constituent companies.

GE said on Tuesday that it would sell its oil-services firm Baker Hughes HBGE.N and spin off its healthcare business, leaving a slimmed-down company focused on jet engines, power plants and renewable energy.

Eight of the 11 most recent companies to join the Dow have seen share prices decline in the three days following a debut.

The second worst performing entrant was Mondelez International Inc (MDLZ.O), which saw shares fall 6.8 percent after joining the index in September 2008 when it replaced American International Group Inc (AIG.N).

Reporting by James Thorne; Editing by Alden Bentley and Lisa Shumaker

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