Our analysis is based on comparing CVS Health Corp. with the following peers – Walgreens Boots Alliance Inc, Rite Aid Corporation, PetMed Express, Inc., PharMerica Corporation and BioScrip, Inc. (WBA-US, RAD-US, PETS-US, PMC-US and BIOS-US).
CVS Health Corp.’s dividend yield is 2.23 percent and its dividend payout is 36.22 percent. This compares to a peer median dividend yield of 1.98 percent and a payout level of 37.56 percent. This relatively higher dividend yield and lower payout ratio makes the company a good candidate for dividend investors looking seeking good current dividend income within this peer group. In addition, the company’s relatively good dividend quality score of 75 out of a possible score of 100, underscores its attractiveness for dividend investors.
Dividend Quality Overview
- Over the last twelve months (prior to December 31, 2016), CVS-US paid a high quality dividend, which represents a yield of 2.23% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 4 were high quality and 1 was medium quality.
- The ending cash balance, with a dividend coverage of 1.88x, provides a moderate cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to December 31, 2016), CVS-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 5.47x), investing cash flow (coverage of -1.36x), issuance cash flow (coverage of -2.61x) and twelve-month prior cash (coverage of 1.38x), for a total dividend coverage of 2.88x.
CVS-US‘s issuance cash flow includes outflows from net debt repayment (coverage of -0.33x) and net share buybacks (coverage of -2.30x). Thus, the total coverage including share buybacks is 5.18x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||1.39||1.3||1.17||1.46||2.2||2.23|
|Dividend Payout (%)||23.48||25.32||29.69||31.93||36.22||36.22|
A complete list of metrics and analysis is available on the company page.
CVS Health Corp. engages in the provision of health care services. It operates trough the following segments: Pharmacy Services, Retail or Long Term Care, and Corporate. The Pharmacy Services segment offers pharmacy benefit management solutions. The Retail or Long Term Care segment includes selling of prescription drugs and assortment of general merchandise. The Corporate segment involves in providing management and administrative services. The company was founded by Stanley P. Goldstein and Ralph Hoagland in 1963 and is headquartered in Woonsocket, RI.
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