We recently published a list of 13 best healthcare dividend stocks to invest in. In this article, we look at where CVS Health Corporation (NYSE: CVS) can compete with other best healthcare dividend stocks to invest in.
The US healthcare sector has been at the forefront since the emergence of Covid-19 in 2020, causing significant changes to the industry. The rise of telehealth, virtual consultations, and technological advances have shaped the way healthcare services are delivered.
Over the past 20 years, the healthcare sector has expanded considerably in relation to the broader economy, as reflected in the increasing share of gross domestic product (GDP). According to a CNBC report in 2003, healthcare costs accounted for 15.7% of US GDP, and increased by about 1.7 percentage points over the next decade to reach 17.4% in 2013. Today, it is estimated at around 18.4% of GDP, and forecasts from the Centers for Medicare & Medicaid Services suggest that it can withstand 20% including Deftice for forced by. Advances in medical technology and increased costs. The elderly population significantly increased the need for medical care, especially as the baby boomers retired, but longer life expectancy led to longer medical use. Furthermore, the prevalence of chronic diseases such as diabetes, cardiovascular disease and obesity contributes to increased costs. The latest breakthroughs in diagnostics, treatments, and medicines (beneficial) often come with higher costs, and further encourage sector expansion.
The overall share of the healthcare industry's economy is growing, with healthcare companies experiencing faster revenue growth than the broader markets over the past five years. Over this period, healthcare sector revenues have risen nearly 61% compared to growth of just over 38% across the broader market, as reported by CNBC. However, despite this strong revenue performance, the healthcare sector is lagging behind the broader market index that has been driven by the rapid expansion of the technology sector.
The healthcare sector faced a turbulent year in 2024. In the first half, investors were drawn to industries such as technology and communication services, particularly those associated with the growing influence of AI, with medical stocks still behind. However, as market gatherings expanded later in the year, healthcare stocks saw some recovery, but certain segments continued to struggle with disparities in supply and demand from the pandemic. Beyond these challenges, fundamental issues and policy uncertainties have created additional obstacles for some of the sector. Some regulatory pressures could be eased in incoming administrations, but others are expected to remain persistent issues, including concerns about drug pricing.
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On a positive note, innovation remained strong throughout the year. Biotechnology companies have contributed to increasing market valuation for pharmaceutical companies by providing a series of encouraging clinical updates, whilst increasing enthusiasm for new treatments targeting obesity and diabetes. A faithful report suggests that the healthcare sector is well suited to growth in 2025. The industry is attractive across a variety of market conditions, covering a wide range of segments that strengthen business fundamentals such as rising cash flows and provide a fusion of defensive stability and growth potential.
The healthcare sector is gaining attention due to the increased dividend payments. Janus Henderson reports that in the third quarter of 2024, the total dividend distributed by the global healthcare industry reached $25.7 billion, up from $18.7 billion in the third quarter of 2018. With this in mind, we'll look at some of the best dividend stocks in the healthcare sector.
In this list, we scanned Insider Monkey's Q4 2024 database and selected healthcare dividend companies. From that list, we selected healthcare stocks with a strong track record of paying dividends to shareholders. This makes it resilient in your current environment. According to Insider Monkey's 2024 database, stocks are ranked in ascending order in which hedge fund investors own the stock.
Why are hedge funds interested in the stocks they accumulate? The reason is simple. Our research shows that mimic the top stock picks of the best hedge funds can outperform the market. The quarterly newsletter strategy has chosen 14 small and large caps per quarter, returning 373.4% since May 2014, surpassing the benchmark by 218 percentage points (see more here).
Is CVS Health Corporation (CVS) the best healthcare dividend stock to invest in?
Retail pharmacy shelves row.
Number of hedge fund holders: 74
CVS Health Corporation (NYSE: CVS) is an American healthcare company that provides advanced healthcare, ranging from pharmacy services and health planning to health and wellness. Stocks have surpassed the wider market with a wide margin and have skyrocketed over 54% since its launch in 2025, but the market has entered negative territory. Given the struggles last year, the news may have been a welcome surprise. These challenges ultimately resulted in a leadership change, with David Joyner replacing Karen Lynch as CEO. This past quarter was responsible for his first full period. With new leadership in place, investors' sentiment may be improving, leading to more stable quarterly outcomes.
In the fourth quarter of 2024, CVS Health Corporation (NYSE: CVS) reported revenue of $97.7 billion, up 4.2% from the same period last year. The GAAP dilution EPS fell to $1.50 from $1.58 the previous year, with the adjusted EPS falling from $2.12 to $1.19. This decline was driven primarily by poor performance in the healthcare benefits segment. This was affected by continued use pressure and the negative impact of the company's Medicare Advantage Star rating for the 2024 payment year.
CVS Health Corporation (NYSE: CVS) is one of the best dividend stocks on the list with solid cash jobs. The company has now reached nearly $8.6 billion in cash and cash at the end of the year. FY24's operating cash flow exceeded $9.1 billion. The company has been paying regular dividends to shareholders since 1997. It currently offers a quarterly dividend of $0.665 per share, and as of March 20th, it has a dividend yield of 3.90%.
Overall, CVS ranks 11th in the list of the best healthcare dividend stocks to invest in. While acknowledging the potential of CVS as an investment, our belief lies in the belief that some deeply undervalued dividend stocks offer higher returns and are greater promising within a shorter time frame. If you're looking for deep, undervalued dividend stocks that are more promising than CVS, but trade at 10 times the revenue and increase their revenues at digit rates of twice the year, check out our report on cheap dividend stocks in the soil.
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Disclosure: None. This article was originally published on Insider Monkey.
