CVS Caremark Offers Upbeat 2013 Forecast & Boosts Dividend by 38% (CVS)


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Drug store chain operator CVS Caremark Corporation ( CVS ) 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 the year.

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 2013.

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 Thursday.

The Bottom Line
Shares of CVS Caremark ( CVS ) 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 ( CVS ) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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