After struggling for a few years, CVS Health's (CVS 0.73%) stock has been on a good run, trading up over 107% since the start of 2025 (as of market close on May 25).
Because of stagnant stock growth, CVS's main appeal has been its dividend. At the time of writing, CVS's dividend yield is nearly 2.9%, more than 2.5 times the S&P 500 average. And while an attractive dividend is always nice, it's only as valuable as it is sustainable.
So, just how sustainable is CVS's dividend?
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In its most recent quarter (ended March 31), CVS generated $4.2 billion in cash flow from its operations. Although it was down from $4.6 billion last year, it was still more than enough to cover its dividend obligations. CVS paid out $847 million in dividends in the quarter, or just over 20% of its cash flow.
NYSE: CVS
Key Data Points
CVS expects its cash flow to be at least $9.5 billion this year, which would comfortably cover the $3.39 billion it's projected to pay in dividends. The company is known to pause its annual dividend increases -- as it did for almost four years to help pay down its Aetna acquisition debt and as it is doing now -- but you shouldn't have to worry about it eliminating its dividend. Its cash flow is healthy enough to support it, even with its higher-than-preferred debt right now.
