At the start of 2024, Walgreens Boots Alliance (WBA 1.81%) made a big move, announcing that it would be slashing its dividend by 48%. While it was bad news for income investors relying on the dividend, it was a decision that shouldn't have come as too big of a surprise given the company's lackluster earnings results and poor financials. But given the stock's struggles, Walgreens' dividend yield remains high at around 5%.

The company, however, recently posted another underwhelming quarter and further net losses. Is the lower dividend payment safe enough for income investors to feel comfortable owning Walgreens' stock, or could another cut be coming?

Walgreens generated growth last quarter but its margins didn't improve

For the three-month period ending Feb. 29, the good news for investors was that Walgreens' sales of $37.1 billion grew by 6.3% year over year. The downside, however, was that the company's gross profit was actually lower than in the prior-year period. At the same time, its selling, general, and administrative expenses rose by nearly $1 billion to $7.9 billion, creating a more difficult hurdle for the company to hit breakeven.

Walgreens incurred goodwill impairment charges totaling $12.4 billion last quarter related to its investment in VillageMD. But even when excluding those charges, the company would still have incurred an operating loss of $802 million. In the prior-year period, the healthcare company posted a narrow operating profit of just $197 million.

And over the past six months, Walgreens has spent $918 million in cash on its day-to-day operating activities alone.

Overall, it doesn't paint a great picture for dividend investors. Without a profitable business and cash flowing out of its operations, continuing to offer a dividend may prove to be a challenge for Walgreens.

Investors don't appear to be convinced of the stock's safety

Shares of Walgreens fell following the release of its latest earnings numbers. New CEO Tim Wentworth has a tall task ahead in trying to turn around the company's operations and winning over investors. By slashing the dividend earlier this year, he's at least shown he isn't afraid of making drastic but necessary moves.

But that's also part of the reason I wouldn't suggest getting too comfortable with the current payout. If Walgreens doesn't show significant improvement in future quarters, there's the possibility that another a cut could take place, and the company may even end up suspending the dividend entirely in order to free up cash flow.

This year, Walgreens' stock is down 22%, and over a five-year stretch, it has cratered 68%. And unless there's a big turnaround in the business as demonstrated by stronger financials, it could be difficult to convince investors to take a chance on this floundering company.

Walgreens may seem cheap, but it's also a high-risk investment

Walgreens' stock is trading at multiyear lows, but there's good reason for that: Its business is struggling, and badly at that. There's not much growth from the company these days and poor margins and bleak prospects for profitability have investors worried that things can still get worse.

Until Walgreens is on solid footing and has proven that it can generate consistent profits, investors are going to be taking on a lot of risk by holding this stock in their portfolios, especially if they're also relying on the dividend. Now that the company no longer has a long streak of dividend increases going, there's even less pressure for management to feel a need to keep the current payout intact.

Given the uncertainty ahead for Walgreens, investors may be better off pursuing other dividend stocks.