Drug store chain operator CVS Caremark Corporation (
) on Thursday offered a better-than-expected 2013 earnings outlook
and unveiled plans to boost its dividend by 38%.
The Woonsocket, RI-based company forecast full-year 2013
adjusted earnings to range from $3.84 to $3.98 per share. On
average, Wall Street analysts are looking for $3.82 per share for
On another positive note, CVS said its board of directors
approved a massive 38% increase in its quarterly dividend payout.
The new dividend of 22.5 cents per share (up from 16.25 cents
previously) will be paid beginning in the first quarter of
CFO Dave Denton commented, "The board's decision to increase the
dividend by 38% reflects our strong performance and outlook as well
as our very significant cash generation capabilities. In late 2010,
we set a dividend payout ratio target of 25% to 30% by 2015, which
implied a compounded dividend growth rate of approximately 25% per
year from 2010. Today's increase allows us to meet our 25% dividend
payout ratio target two years early and marks our tenth consecutive
year of dividend increases. We remain committed to using our free
cash flow to enhance total returns for our shareholders through a
combination of high-return investments, dividend increases and
value-enhancing share repurchases."
CVS Caremark shares rose $2.11, or +4.4%, in premarket trading
The Bottom Line
Shares of CVS Caremark (
) will now have a 1.89% dividend yield, based on the higher
dividend payout and last night's closing stock price of $47.54. The
stock has technical support in the $43-$44 price area. The shares
are trading near all-time highs.
CVS Caremark Corporation (
) is not recommended at this time, holding a Dividend.com DARS™
Rating of 3.4 out of 5 stars.
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