5 Best Retail Dividend Stocks to Buy

4. CVS Health Corporation (NYSE:CVS)

Number of Hedge Fund Investors: 67

CVS Health Corporation (NYSE:CVS) is one of the top dividend growth stocks liked by hedge funds. Earlier this year CVS Health Corporation (NYSE:CVS) announced yet another dividend increase. Over the past 10 years CVS Health Corporation’s (NYSE:CVS) dividend has seen a compound annual growth rate (CAGR) of approximately 10% per year.

CVS Health Corporation (NYSE:CVS) is also highly popular among hedge funds. Insider Monkey’s database shows that 67 hedge funds had stakes in CVS Health Corporation (NYSE:CVS)as of the end of 2023. The biggest stake in CVS Health Corporation (NYSE:CVS) is owned by Bernard Horn’s Polaris Capital Management which owns a $37 million stake in CVS Health Corporation (NYSE:CVS).

In its fourth quarter 2023 investor letter, Vltava Fund stated the following regarding CVS Health Corporation (NYSE:CVS):

“Not every transaction creates value. Some transactions destroy company value. An example of such transaction is CVS Health Corporation (NYSE:CVS)’s acquisition of Oak Street Health in early 2023. This acquisition cost CVS $10.6 billion, and, based on metrics cited by the company itself, it seems to us that it was a waste of money for the most part. Unfortunately, CVS has its own history of overpriced acquisitions. The last one prior to that was in 2018, when CVS bought health insurer Aetna for $69 billion. We had assumed that CVS management, which has since changed, would recognise that mistake and learn from it. We were wrong. The acquisition of Oak Street Health is both disappointing and a warning to us. We now have a company in our portfolio whose capital allocation we consider to be poor and that should not be there. Unfortunately, the situation is complicated by the fact that the CVS stock is now very cheap and therefore we are reluctant to dispose of it just yet. We probably will do so, however, when the opportunity arises.”