CVS Health

CVS Health Corp Announces Dividend Increase

CVS Health

CVS Health Corp (CVS) is another of the companies that has announced they’ll be increasing their dividends and repurchasing stocks. This recent announcement reveals the pharmaceutical giant’s efforts to improve as they will be repurchasing stock and increasing dividends by 27 percent, which is a significant rise. These trends of growing dividends as well as the share repurchasing programs seem to be quite fashionable of late, as a number of companies are engaging in them. The company also announced guidance for FY 2016.

Inside sources say that some of the capital they have generated is slated for use in investments to purchase new businesses. The rest of the capital will be used for share repurchases and to return money to investors. The 27 percent rise of the dividend means the company will be paying out $0.35 per share for every quarter, versus the $0.3 they were paying out previously. This means the annual dividend payout works out to $1.4 per share, with the rate of return climbing from 1.3 percent to 1.55 percent.

Furthermore, CVS Health Corp. has announced that the amount they have allocated for share repurchases is $10 billion. The strategic plan has been finalized and has been designed to be completed over a number of years. Insider sources have stated that this plan will be an addition to the $2.7 billion previously allocated for share repurchases that received approval in 2013 from the combined board of directors. This makes the overall amount to be spent on share repurchases $12.7 billion. The market cap at the moment is almost $104 billion.

Other numbers the company published included their forecasted free cash flow, which they expect will range between $5.9 billion and $6.2 billion. The cash generated from operations is expected to come in between $7.6 billion and $7.9 billion. Thomson Reuters released a statement saying they expect the EPS to come in at $5.11, while revenues are predicted to reach $146.1 billion.

CVS Health Corp. stock recently closed out at an impressive $89.87, with the shares pushing just over $90. The company has been trading between $64.95 and $92 per share over the past 12 months. Analysts have set a price target of $92.3 per share.

While everything might seem positive for investors, one issue that they need to consider is that analysts are speculating a high of $103 per share, which seems quite attractive taking into account the lowest price target prediction of $70 per share.

These figures indicated the company will generate a good performance and that it is in a pretty good market scenario. While an increase in return on dividends might be something investors appreciate, it should be noted that the dividend numbers are directly related to how much the company can generate as a return. As long as CVS Health Corp can perform well in that regard, then there’s a good chance investors will gain some amazing rewards. However, weak yields will lead to weak ROI.

The figures seem relatively favorable and the moment and FY 2016 is expected to close on a high for CVS Health Corp.


Joe Duerr covers Healthcare Services, Medical Devices and small cap Biotech companies. Prior to joining Micro Cap Mag, Joe was a large cap pharma contributor at Morningstar.

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