CVS Health (CVS) Dividend Stock Analysis

CVS Health Dividend

CVS Health has paid a dividend every year since 1997. The company has increased its’ dividend three times since freezing the dividend at $2.00 in 2017 to pay down debt used to for the Aetna acquisition.

Current Dividend Annualized: $2.66

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CVS Health (CVS) Intrinsic Value – Margin of Safety Analysis            

(updated February 2025) 

Normalized Diluted Earnings Per Share (TTM): $3.66
Free Cash Flow Per Share (TTM): $5.01
Cash Flow From Operations (CFO) Per Share (TTM): $7.22

Estimated Intrinsic Value: $71

Target Buy Price Based on Required Margin of Safety = $44
(Required Margin of Safety Based On Risk Stability Grade:

A = 0%, B = 20%, C = 40%, D = 60%, F = 80%)

Target SELL Price Based on Estimated Intrinsic Value = $74
(Allow Overvaluation Adjusted by Risk Stability Grade:

A = 40%, B = 25%, C = 15%, D = 5%, F = 0%)

Risk / Stability Grade: D

A grade indicates a quality company with a strong balance sheet, high earnings quality, and a positive business environment. These stocks require the slimmest margin of safety within the stock universe.

B grade indicates a company with a good balance sheet, good earning quality, and a stable business environment. The margin of safety required should be greater than stocks with an A grade but less than the average stock.

C grade indicates a company with a sufficient balance sheet, at least average earnings quality, and a reasonably stable business environment. The margin of safety required is greater than A & B stocks, but less than D & F stocks.

D grade indicates a company in good standing but has issues that could affect its stability and long term risks. D rated stocks should require a large margin of safety when purchased.

F grade indicates a company with significant issues that are currently affecting its stability and long term risks. Require an extremely large margin of safety for F rated stocks when purchased.

Financial Risk Grade: D

A grade indicates an extremely low probability of a dividend cut. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories.

B grade indicates a very low probability for a dividend cut.

C grade indicates a low probability for a dividend cut and/or average safety risk.

D grade indicates there are issues that should be considered concerning future dividend payments.

F grade indicates serious dividend safety risks. Investors should complete comprehensive due diligence before investing.

Business Quality Grade:  D

A grade indicates earnings quality is high or far above average.

B grade indicates earnings quality is good and/or above average.

C grade indicates earnings quality is acceptable or average.

D grade indicates earnings quality is poor and requires thoughtful due diligence.

F grade indicates the quality of the earnings is poor or far below average requiring serious due diligence.

Earnings Report:  12/31/24

AAAMP Portfolios Position Disclosures:
Treasure Trove Dividend (TTD) – None
Global Dividend Value (GDV) – None
Dividend Growth & Income (DGI) – None
Global Value (GV) – None
Global Value Aggressive (GVA) – None
Global Conservative Income (GCI) – None 
Global High Income (GHI) – None

Company Description

Sector: Healthcare
Industry: Healthcare Plans

Company Overview:
CVS Health (CVS) is a leading healthcare company that operates a large network of retail pharmacies, a major pharmacy benefits management (PBM) business through CVS Caremark, and a health insurance segment via Aetna. It provides a range of healthcare services, including prescription drug dispensing, in-store clinics, and telehealth, aiming to integrate healthcare delivery and improve patient outcomes.

Company Strengths:
CVS Health benefits from its diversified business model, combining retail pharmacy, PBM services, and health insurance, which creates multiple revenue streams and competitive advantages. Its acquisition of Aetna strengthened its position in managed care, while its nationwide presence and MinuteClinic locations improve accessibility to healthcare. The company’s scale and data-driven approach enhance cost efficiency and patient engagement.

Company Challenges:
CVS faces regulatory risks and reimbursement pressures in both its PBM and retail pharmacy businesses. The shift toward lower-margin generic drugs and increased competition from online and discount retailers, such as Amazon Pharmacy, pose threats to its retail segment. Additionally, integrating its healthcare services while managing high debt levels from acquisitions remains a challenge in maintaining long-term profitability.

Disclaimer:
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.