CVS Health (CVS) Dividend Stock Analysis
CVS Health Dividend
The CVS Health dividend has been paid continuously since 1993 and increased for 14 consecutive years;
qualifying the company a Dividend Contender.
Dividend Yield: 2.9%
Current Dividend: $2.00
Cash Flow From Operations (CFO) Per Share (tmm): $7.82
Free Cash Flow Per Share (tmm): $5.95
Market Capitalization: $69 B
Enterprise Value: $94 B
Dividend Analyzer Checklist
(updated January 2018)
Dividend Safety Score (21/33 points)
Dividend Payout Ratio (ttm): 40%
Cash Dividend Payout Ratio (ttm): 24% (12/12 points)
Net Financial Debt: $23229 M
Total Assets: $92853 M
Net Financial Debt / Total Assets: 25% (5/12 points)
Net Financial Debt to EBITDA (ttm): 229%
Piotroski Score (1-9) (TTM): (4/9 points)
Profitability & Growth Score (23/33 points)
Operating Earnings Yield (ttm): 12.3% (15/15 points)
Net Income (ttm): $5042 M
Gross Profit (ttm): $28247 M
Total Assets: $92853 M
Gross Profitability Ratio = GP / Total Assets: 30% (8/18 points)
Cash Return On Invested Capital (CROIC)(tttm): 13%
Return on Invested Capital (ROIC): 8%
Valuation Score (30/34 points)
Free Cash Flow Yield (ttm): 10.7% (17/17 points)
EV to EBIT (ttm): 10.6
EV to EBITDA (ttm): 8.3 (13/17 points)
Price to Sales Ratio (ttm): 0.4
Price to Book Value (ttm): 2.1
Price to Earnings Ratio (P/E) (ttm): 15
PE 10: 22
TOTAL POINTS – (74/100) (50 is an average score)
Earnings Report: 11/08/17
Next Earnings Report: 2/09/18
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Rankings & Recommendations
(updated January 2018)
CVS Health is ranked #22 (out of 373) overall and #3 (out of 31) in the Healthcare sector by the Dividend Analyzer.
Walgreen’s or CVS Health? For investors trying to decide between the two its basically a toss-up. If your portfolio needs more healthcare I would favor CVS. If your portfolio needs more of tilt toward consumer products I would favor WBA.
Type of Investor / Recommendation
Large Diversified Dividend Portfolios / Should Be Considered
Looking For Exposure to Healthcare Sector / Should Be Considered
Deep Value Investors / Should Be Considered
Portfolio Position Disclosures:
DVB Portfolio Stocks: Long
AAAMP Global Value Portfolio: None
AAAMP Retirement Growth & Income Portfolio: Long
AAAMP Treasure Trove Twelve Portfolio: Long
Industry: Healthcare Plans
CVS Health is attempting to change how healthcare will be provided to individuals. This is evident in the announced merger of CVS and Aetna; which is the first step to use their infrastructure to sell insurance and manage/treat customers in their many convenient locations.
CVS Health is a “pharmacy innovation company with a simple and clear purpose: helping people on their path to better health.” CVS is a vertically integrated company that describes four segments in which it provides health care services:
CVS Pharmacy retail stores have offered products and services needed for better health for more than 50 years. In addition to prescriptions the stores offer vitamins, skin care, make-up & hair, health and medicine, personal care, home health care products, and general merchandise products..
CVS Caremark is the prescription benefit management subsidiary of CVS Health. This service processes prescription claims by acting as the agent between health plans and retail customers.
With over 1,100 locations and growing, CVS MinuteClinic offers convenient quality health care within CVS stores. A variety of services are offered by nurse practitioners including diagnosing illnesses and injuries and providing wellness services such as vaccinations, physicals, screening, and chronic condition monitoring.
This segment helps customers with rare or complex conditions. Services include home services, prescription refills and delivery, and professionals trained in these special conditions.
Through strategic mergers and acquisitions CVS has evolved into one of the largest pharmacy retailers and a top-tier Prescription Benefit Manager (PBM). The company has significant competitive advantages because of its size.
CVS and Walgreen’s operate as a duopoly. Economies of scale and pricing power give CVS unmatched advantages. Demographics and trends in medicine (i.e. increased insurance coverage) provide powerful drivers for continued growth.
Pricing pressure can come from above and below in a vertically integrated company. Consolidation among drug suppliers could chip away at CVS pricing power. PBM members may demand more pharmacy choices which can chip away at CVS profits.
No company has done a better job of growing through acquisitions than CVS (i.e. Target’s pharmacies, Omnicare, Long Drugs’ Stores, Minute Clinic, etc.).
Walgreens is a formidable competitor with many of the same competitive advantages as CVS. However, both companies must deal with increased competition from retailers and mass grocers in non-pharmaceutical products. In addition changes in insurance (i.e. Medicare, Medicaid, and Obamacare) bring uncertainty.