Thursday, January 11, 2007

CVS Corp. Raises Dividend 25.8%

CVS is not a true dividend growth stock as the company went from 1999-2003 without increasing its dividend. However, it is an example of a stock that trades at a lower yield and these lower yielding stocks tend to have higher dividend growth rates. The 25.8% increase is certainly a nice increase; however, the new yield, .63%, still remains quite a bit lower than the S&P 500 Index yield of 1.8%. The payout ratio based on the new dividend and 2007 earnings is approximately 10.4%. This is below the 5-year average payout of 13%.

(click on charts for larger image)

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