13 Best Pharma Dividend Stocks To Buy In 2024

9. CVS Health Corporation (NYSE:CVS)

Dividend Yield as of December 28: 6.00%

Number of Hedge Fund Holders: 63

CVS Health Corporation (NYSE:CVS) offers a range of health solutions in the U.S. through three segments: Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness. It provides health insurance products, pharmacy benefit management services, and sells prescription and over-the-counter medications. The company also offers health and beauty products, pharmacy consulting, and services to care facilities.

CVS Health Corporation (NYSE:CVS), once seen as a potential US healthcare giant, has faced challenges despite its ambitious expansion. After acquiring Caremark, Aetna, Signify Health, and Oak Street Health, the company aimed to create a healthcare one-stop shop. However, its strategy has faltered, leading to a reduced earnings outlook and a market value of just $80bn, lower than its acquisition costs. Its net debt has surged to $50bn. The company also faces lawsuits over inflated insulin prices and its legacy drugstore business is declining due to competition from Amazon and Walmart. Despite these issues, CVS’s retail arm remains more resilient than some competitors.

CVS Health Corporation (NYSE:CVS)’s Q3 2024 revenues reached $95.4 billion, a 6% year-over-year increase driven by growth in its healthcare benefits and pharmacy segments. Adjusted operating income was $2.5 billion, with adjusted EPS at $1.09, while cash flow from operations stood at $7.2 billion year-to-date, impacted by CMS receipt timing and increased utilization costs. Medical membership grew to 27.1 million, though rising costs and utilization pressures in Medicare and individual exchanges negatively affected performance. Medicaid also faced higher costs due to redeterminations, and commercial business growth is expected to slow in 2025. On the positive side, the pharmacy and consumer wellness segment achieved $32.4 billion in revenue (up 12%), with a 15% increase in adjusted operating income driven by prescription volume and improved drug purchasing.

CVS also returned $837 million to shareholders via dividends during the quarter and ended with $1.2 billion in cash. Its leverage ratio was 4.6x, exceeding the long-term target, but the company remains committed to maintaining investment-grade ratings and aims to reduce leverage through margin recovery in the Aetna business.

Among the 63 hedge funds bullish on CVS Health Corporation (NYSE:CVS) in Q3, Pzena Investment Management held the largest stake, valued at approximately $826 million.