Recent Buy- CVS

Hi readers, it is Friday. Congratulations. Since May 15th, I no longer have to come to work as I quit the company. However, it is very unfortunate that I have become very sick and I have to stay in bed most of time these days. To my surprise, I have lost my weight by 7kg.

Anyway, on May 25th, my GTC order for CVS Health (CVS) was executed as follows.

  • Number of shares: 20
  • Average cost per share: $76.05
  • Initial YOC: 2.6%

As you can see the Y-chart below, 2.6% was the highest entry YOC.

CVS Dividend Chart

However, there is a good reason for why dividend yield of CVS has been getting higher and higher. According to The Motley Fool,

  • CVS’s woes began when it lost two major deals to arch-rival Walgreens Boot Alliance. In August 2016, Prime Therapeutics, one of the nation’s largest PBMs, announced a partnership with Walgreens.
  •  In December, Tricare, the Department of Defense’s nine million members plus benefits program, replaced CVS with Walgreens.

To make matters worse,

  • earlier this month it was reported that was exploring the possibility of entering the pharmacy market. 

In my personal experience as a customer, CVS looked shabby and their staff were not very helpful. So I can guess why Prime Therapeutics and Tricare defected to Walgreen.

Having said that, the company’s dividend payout per share is currently $2.00 and, given that the trailing twelve month adjusted EPS for the company is $5.84, the current payout ratio is only 34%.  So their dividend will be safe for some years to come.

Disclosure: Long CVS




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