CVS: a falling knife I’m willing to catch

The market really doesn’t seem to like CVS Health Corporation right now. Which is fine by me, I guess … I like it more and more the cheaper it gets.

CVS Health Corporation

I added yet another share of CVS Health (CVS) for the low, low price of $64.58 earlier today. I deposited $100 into my Robinhood account over the weekend, as I do every weekend, and figured I might as well put that money to work right away.

CVS is now the fourth-biggest position in my Dividend Farm. With today’s purchase, I have 10 shares worth about $643. The only companies I have more equity in are AT&T ($775), IBM ($789) and New Residential Investment Corporation ($880).

At this point, it’s hard to argue I’m doing anything other than catching a falling knife when it comes to CVS. I mean, I’ve picked up four of my 10 shares this month alone. The first was back on the 5th for $67.26. I added another on the 14th for $66.83, another the very next day for $65.97 and today’s for the aforementioned price of $64.58.

Notice something about those numbers? Yup, they’re getting progressively lower. There’s a method behind the madness, though, and I think that’s what’s more important. I’m not just scooping up shares to lower my cost-basis — although that’s certainly an added bonus (I bought my first few shares in January of 2017 for right around $82 and now my position has a cost-basis of $72.88) — I’m adding because a company I like is getting cheaper and cheaper. Better yet, I can’t figure out why. Other than a genuine fear that Amazon is going to hurt its business, which I think is way overblown, I don’t see why people hate CVS so much.

Its earnings are on the verge of eclipsing its P/E ratio for cryin’ out loud. The $2 annualized dividend, meanwhile, represents a more than 3% yield, which is almost a full 0.5% more than it was when I bought my first share.

Another plus is the ability of CVS to grow its dividend. The share price may be falling, but the dividend most certainly isn’t. It’s been boosting its divi for 14 straight years, most recently at an average rate of 23.11% over the course of the last five. The payout ratio is still super low, too, currently right around 30%.

I also earned a dividend today. Here’s more on that:

V.F. Corporation

V.F. Corporation (VFC), the company behind brands like The North Face and Timberland, passed along a $1.38 dividend ($0.46/share) for the three shares I own. It was my second straight for the current quarterly amount while my first two were for $1.26.

The position has been a great one for me. It’s up $66.14 (42.33%) overall.

This week’s steps

Today’s dividend, my 30th of the month, boosted my March total to $37.95 and my 2018 mark to $122.62.

The purchase of CVS, meanwhile, added a cool $2 to my forward annual dividend income.

Last week’s steps

Friday’s dividend from Duke Energy, coupled with Thursday’s $5.62Tuesday’s $1.84 and the combined $11.08 from Monday, brought my weekly total to $19.43.

I also made a small purchase Wednesday, picking up a share of CVS.

March on!


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