CVS Health Corp (CVS) Cash Flow Fuels 30% Dividend Growth Rate

February 9, 2016

CVS logo
CVS Health Corp

Jay Jackley, Senior Portfolio Manager of Compass Capital Management, says health care is an area where he has found value in the market, and CVS Health Corp (CVS) is a stock that has delivered.

[CVS is] the leading health care services provider in the United States with its large pharmaceutical services company and the United States’ largest retail pharmacy chain. The company fills over 1 billion prescriptions per year and has 7,800 stores in 40 states. In addition, the company provides medical services through its MinuteClinic walk-in clinic business.

The company is projected to grow earnings at 12% to 14% annually over the next five years. The company has steadily increased its operating and net profit margins over the past 10 years. The recent acquisition of Omnicare, a pharmacy services company with a focus in nursing homes, will help further the company’s growth.

The company has a strong balance sheet, and the business generates about $6 billion in cash flow annually. This has helped fuel a 30% growth rate in the dividend payout over the past five years.

Jay Jackley
Jay Jackley