5 Best Healthcare Dividend Stocks To Buy Now

3. CVS Health Corporation (NYSE:CVS)

Number of Hedge Fund Holders: 65

Dividend Yield as of October 28: 2.34%

CVS Health Corporation (NYSE:CVS) is a provider of health services in the United States, operating through Health Care Benefits, Pharmacy Services, and Retail/LTC segments. On September 22, CVS Health Corporation (NYSE:CVS) declared a quarterly dividend of $0.55 per share, in line with previous. The dividend is payable on November 1. CVS Health Corporation (NYSE:CVS) is one of the best dividend stocks to buy now. 

On October 20, BofA analyst Michael Cherny maintained a Buy rating on CVS Health Corporation (NYSE:CVS) but trimmed the price target on the shares to $118 from $122. The analyst expects Q3 results to be generally steady, with well-understood short-term tailwinds and headwinds, the analyst told investors. 

According to Insider Monkey’s data, 65 hedge funds were long CVS Health Corporation (NYSE:CVS) at the conclusion of the second quarter of 2022, compared to 72 funds in the last quarter. Cliff Asness’ AQR Capital Management is the leading position holder in the company, with 3.3 million shares worth $312.7 million. 

Here is what Vltava Fund has to say about CVS Health Corporation (NYSE:CVS) in its Q3 2022 investor letter:

“CVS is a leader in the provision of healthcare services in the USA. It has three main businesses: an enormous network of pharmacies, a health insurance company, and “prescription benefit management”, which is a kind of intermediary between insurance companies and pharmacies. This is the result of large acquisitions over the past 15 years – most notably of Caremark (2007) and Aetna (2018). The markets had deemed its acquisition of health insurer Aetna too expensive (and we agree), so CVS stock then fell into disfavour for a few years.

We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.

This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.”