Shares of Walgreens Boots Alliance (WBA -3.09%) were sinking 6.5% lower at 11:10 a.m. ET on Thursday and had been down as much as 11.7% earlier in the morning. The decline came after the pharmacy retailer and wholesaler announced its fiscal 2024 first-quarter results and reduced its dividend payout by 48%.

Walgreens' fiscal Q1 revenue of $36.7 billion was better than the consensus Wall Street estimate of nearly $34.9 billion. Its adjusted earnings per share of $0.66 also topped the average analysts' estimate of $0.61 per share.

However, investors reacted negatively to the company's dividend cut. Walgreens had previously increased its dividend for 47 consecutive years.

Why did Walgreens cut its dividend?

New Walgreens CEO Tim Wentworth stated in a press release that the dividend cut was a "difficult decision." He said that the reduction was needed to "strengthen our long-term balance sheet and cash position." Wentworth added that the move will increase the company's cash flow and free up additional capital to "invest in sustainable growth initiatives in our pharmacy and healthcare businesses, which we believe will ultimately improve shareholder value."

All of Wentworth's statements can be summed up succinctly: Walgreens simply didn't have a better alternative. The company has a significant debt load. It faces challenging market dynamics. Although the decision to cut the dividend was no doubt painful, it was necessary.

Is Walgreens stock a buy on the pullback?

Income investors could be attracted to Walgreens despite the lower dividend. The pharmacy giant's dividend yield will still top 4%. Value investors looking for turnaround opportunities might like the stock as well, with Walgreens now trading at a forward price-to-earnings multiple of under 7.7.

However, I think that most investors will be better off staying on the sidelines with Walgreens for now. There are plenty of stocks that offer better risk-reward propositions.