New Purchase – CVS
Good Afternoon
On Wednesday I created a post looking back at the stock picks I made in September and how they are doing now. I also mentioned 2 stocks I was watching and thinking of starting a position in. Check out that post here.
The other day I started a new position in CVS. I purchased 17 shares for a all in cost of $1270.99 USD. With a yield of 2.74% it will increase my yearly dividend income by 34.00 usd. The company will pay me in February, May, August and November. This is nice because I need to pump up those months. Currently I’m to poor to drip this company but will be adding to this position in the future.
CVS has dropped even more since I made the purchase offering a great buying opportunity in my opinion. The stock ex dividend date is October 23rd so you can get in now and get a dividend in November.
So why did I buy CVS?
Recently rumors have came out again that Amazon is going to start selling prescription drugs. (Lately alot of my buys have been pullbacks based on the amazon effect) While amazon has a tonne of money to spend, I think there will be a lot of hurdles to overcome. How can you prove who you are actually selling the prescription too? Have you went to a pharmacy round here lately? even cold medicine gets locked up.
Anyways pharmacies stock prices dropped on the news. On October 5th CVS closed at 80.90 per share. Today 9 days later its at 72.60. CVS is now only $3.00 over their 52 week low. The have also boosted their dividend for the last 14 years. Not as long as Walgreen’s but their 10 year dividend growth rate sits at 27% a year. MMMMMMMMMMM! The baby boomer’s are also aging and will need more drugs.
What is CVS?
CVS Health Corporation, together with its subsidiaries, is an integrated pharmacy healthcare company. The Company provides pharmacy care for the senior community through Omnicare, Inc. (Omnicare) and Omnicare’s long-term care (LTC) operations, which include distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. It operates through three segments: Pharmacy Services, Retail/LTC and Corporate. The Pharmacy Services Segment provides a range of pharmacy benefit management (PBM) solutions to its clients. As of December 31, 2016, the Retail/LTC Segment included 9,709 retail locations (of which 7,980 were its stores that operated a pharmacy and 1,674 were its pharmacies located within Target Corporation (Target) stores), its online retail pharmacy Websites, CVS.com, Navarro.com and Onofre.com.br, 38 onsite pharmacy stores, its long-term care pharmacy operations and its retail healthcare clinics (Source RBC direct investing)
Conclusion
I feel its a great buy at the moment. It seems like it could keep going lower on the sentiment but who knows where the bottom is. Morningstar gives it a fair value of 109.00 USD. That’s a nice amount of profit if it go’s to fair value. Like always do your own research I’m no pro. Have a great weekend!
Keep stacking those Dividends, Cheers!
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CVS is a great company and I own it as well. It was on my watch list for the reasons you purchased it. In the long run you are going to love this healthcare play. Very nice job PCI and congrats on adding a great company to your portfolio.
Bert
Thanks Bert. I feel its a great buy!
How concerned are you with Amazon’s interest to being a new competitor in that industry with CVS? I’m surprised none of you mentioned about Amazon.
Hey ac always nice seeing new faces! Thanks for coming by. The way the market reacts its like in the future there will only be amazon……. i enjoy the social interaction of stores as well as the convience if getting it right away. If im sick i want the meds now not in a day or 2.
Oops, I realized I skipped reading that paragraph where you stated about Amazon. Please disregard 🙂
Np
I think you made a great purchase PCI. When I was looking at adding 5 more stocks to my portfolio, CVS was a possibility. Good on you for getting in before the November dividend payout. And those 17 shares will eventually turn into 18, 19, etc!!!
Hey port thanks. Lets see wht you decide to start a position in!
Seems like a good buy. Look forward to seeing how it works out for you.
Hey thanks Matt! Hopefully good
Hi PCI, I as mentioned in the previous post I added myself some shares at $74.4. If the price will go to $70 I will add more. My 2 cents, Amazon and Netflix, as now, are the most overvalued company from FAANG group. Amazon is going into all directions and at some point, somehow will blew… I believe that better to be strong in a few things then all over the place… something else, do the people really wants to stay home and shop instead going to stores and have some fun?
Also, the companies will adapt… look at Walmart!!!
Haha so true Cris look at my comment above. I mentioned its.nice to go to stores for social interaction as well. Most people arent that hermit to just stay in their house and get everything delivered to them. I think amazon is for sure overvalued never ever looked at netflix to be honest. I use their services though! But disney making their own netflix might be a game changer for netflix stock. Cheers Cris
Stocks goes up and down all the time and it’s impossible to time the low or high at any point in time. When I purchased my stocks I focused on the reasons for acquiring them. As long as they fit into my financial plan, portfolio mix and long term wealth strategy, I will be satisfied with my purchase once it’s executed.
I sometimes wish that the TSX has a wider mix of sectors to invest in. Especially in the technology, pharmaceutical and consumer staples. The good news is, we are able to purchase them in the US market if we want to.
I agree the tsx lacks some sectors but thats what our rrsp is for! Cheers Leo
CVS is a great company that is on my watch list as well. Congrats on the buy! 🙂
Hey thx dynasty!
CVS has been getting a lot of attention lately. Price is at a nice entry point and the dividend growth is pretty high. It will also pay you one time before the year is up to help your growth numbers. Great pick up.
Thanks Daze. I feel good about it! Cheers
Hi there PCI, I think you made a great purchase. I also got CVS on my watch list and hope to add to it (although I’m not sure if that will be before the ex-divi date). 1 cool thing to remember is that they will probably increase the dividend in february, which will most likely bring the yield on cost above 3% at the current share price.
– SD
Haha great name! Always nice seeing new faces. Why not buy before the ex dividend date what price are you waiting for?
Cheers stache!