12 Best Fortune 500 Dividend Stocks To Buy Right Now

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8. CVS Health Corporation (NYSE:CVS)

Number of Hedge Fund Holders: 63

Dividend Yield: 5.54%

Market Cap: $64.9 billion

America’s leading health solutions company, CVS Health Corporation (NYSE:CVS) provides advanced health care from pharmacy services and health plans to health and wellness. The company operates under three segments namely Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness. The idea is for CVS stores to become a one-stop shop and bring all the many parts of the healthcare chain under one roof.

CVS Health Corporation (NYSE:CVS)’s Q3 2024 reports reflect its efforts to adapt to a changing healthcare landscape. Despite significant headwinds, the company managed to increase its quarterly revenue to $95.4 billion, up 6.3% YoY and beating the analysts’ estimates by $2.74 billion. The results reflect strong performance in its Health Services and Pharmacy & Consumer Wellness segments, but the healthcare benefits business remains challenged as a consequence of continued elevated levels of utilization. As a result, CVS’ Q3 2024 operating income decreased 77.5% YoY, primarily due to a decline in the Health Care Benefits segment and restructuring charges of approximately $1.2 billion recorded in the current year.

CVS Health Corporation (NYSE:CVS) is also expected to benefit from the recent proposal of the Biden administration to significantly raise the amount that the government pays to insurers who offer Medicare Advantage plans. The Centers for Medicare & Medicaid Services intends to increase its payments to insurers that offer Medicare Advantage plans by an average of 4.3%, or over $21 billion, in 2026 compared to this year.

CVS Health Corporation (NYSE:CVS)’s stock price has surged by over 14% YTD but has declined by more than 33% since a year ago. The primary reason for this stock value erosion is the company’s Pharmacy and Consumer Wellness division, as the expected synergy from aggregating this segment to the health businesses is yet to bear fruit. The adjusted operating income of this business has plummeted from $7.26 billion in 2021 to an expected $5.70-5.75 billion in 2024. The front store revenue is expected to fall by 6.2% while the online segment continues to face tough competition from leading players like Amazon.

CVS Health Corporation (NYSE:CVS) maintained a strong cash position at the end of Q3 2024, with $6.9 billion in cash and cash equivalents. The company has consistently paid dividends to shareholders since 1997 and announced a quarterly dividend per share of $0.665 this month.

CVS Health Corporation (NYSE:CVS) ranks among the 10 Best January Dividend Stocks to Buy.

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