This Under-the-Radar Healthcare Stock Could Be a Solid Income Play

CVS Health Corporation (NYSE:CVS) is one of the best dividend stocks for a bear market.

Even during economic downturns, people continue to rely on medications, essential consumer products, and affordable local healthcare. CVS Health Corporation (NYSE:CVS) serves as a convenient healthcare and retail destination within communities.

The company’s overall business remains solid, thanks to its diversified operations and multiple sources of revenue. In recent years, it has expanded its presence in primary care and launched a subsidiary called Cordavis to focus on developing and marketing biosimilar drugs. Its broad reach across communities and wide range of services are key advantages.

Lately, higher Medicare usage and increased post-pandemic healthcare costs have impacted the company’s revenue and earnings growth. However, CVS Health Corporation (NYSE:CVS) remains profitable and maintains a solid cash position. In the most recent quarter, it reported $4.6 billion in operating cash flow. Looking ahead to 2025, the company has raised its full-year operating cash flow forecast from around $6.5 billion to approximately $7.0 billion.

In addition, CVS Health Corporation (NYSE:CVS) appears to have significant room to grow its dividend. With a cash payout ratio of just 30%, even doubling that figure would still leave it within a sustainable range.

Due to this strong cash generation, CVS Health Corporation (NYSE:CVS) has maintained its payouts since 1997. Currently, it offers a quarterly dividend of $0.665 per share and has a dividend yield of 3.96%, as of June 17.

While we acknowledge the potential of CVS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT:  15 Best Next Generation Dividend Aristocrats to Buy and 10 Best Dividend Stocks to Buy for Dependable Dividend Growth

Disclosure. None.