CVS Health Gains as Revenue Grows, Dividend Remains Strong

Key Points

• CVS has broken past 52-week highs, and this newfound optimism is likely to carry the stock even higher in the coming quarters.
• With strong financials and fundamentals, seeing Wall Street analysts raise their price targets makes sense.
• Institutions are also buying in on this momentum play with an attractive dividend payout.

One of the best ways for any investor to lock in additional portfolio upside is to start exploring areas where few others are willing to venture, especially when those are the least popular ones in the entire market. 

In the consumer staples sector, one company (usually a quiet one) is starting to break into new 52-week highs. This theme is likely to continue.

Shares of CVS Health Corp. NYSE: CVS are now one of the hottest performers in the industry, especially as its market share has directly increased from the decreased footprint seen in its closest competitor, Walgreens Boots Alliance Inc. NASDAQ: WBA, a company that has been closing more and more physical locations each quarter.

That open field ahead could be one reason markets have become bullish on CVS, but that’s not all.

That's what investors dig deeper into the company's finances to consider where those could expand in the coming quarters. Today’s bullish section seems to be merely a shadow of the future potential this company can offer.

More than that, steady and predictable companies like CVS will probably become preferred now that the Federal Reserve Chairman Jerome Powell has called the stock market a “Highly valued "asset.

Newfound" Optimism for CVS Stock

This $96.8 billion company has a wide road ahead of it in terms of size expansion, and its new 52-week high price could be the market pricing in this simple fact. More than just a 70.1% rally on a year-to-date basis, there are other fundamental reasons why CVS is going to be a winner for all its shareholders.

Shareholders, including Ameriprise Financial, increased their holdings by 5.2% as of August 2025, bringing their stake to a new high of $565.4 million as of today. As bullish as this may seem, this latest addition was only a shadow of the overall $3.3 billion in institutional buying of CVS stock that took place over the past quarter alone.

There must be a reason deeper than just technical momentum to explain why all this new optimism has been coming into CVS. This one must be coming from the financials themselves, especially as Barclays analyst Andrew Mok raised his price target on CVS stock to a new high of $87 per share, implying 14% additional upside and a new 52-week high.

That being said, this view is significantly higher than the consensus target of only $78.25 per share for CVS. This isn’t where the benefits end, however.

Strong Financials Boost Shareholder Confidence

Management knows that this expanding market share, following the competition’s de-competition, presents an opportunity to reward shareholders willing to stick by CVS through thick and thin. This is why the stock now pays $2.66 in dividends, translating to an annualized yield of 3.5% to beat inflation rates in the United States.

Here’s how to make sense of all this bullishness going on around CVS today.

As of the company’s latest quarter, which reported a net earnings per share (EPS) of $1.81, 24% above the MarketBeat consensus of $1.46, the stage has been set for an unexpected streak of financial outperformance ahead.

In the company’s press release, investors will see the leading key performance indicators (KPIs), such as net revenues reported at $98.9 billion, representing an annual growth rate of 8.4%. This is no easy task for a company operating in one of the economy's most traditional (and relatively steady) areas.

Not only did revenue increase from last year, but efficiencies also improved. Not many people know that CVS has strong connections to government health programs, which directly benefit the company in medicine and service inflation (which has been high over the past 12 months).

This direct aid has enabled CVS to reinvest in technology efficiencies, resulting in a smoother connection between caregivers and patients, which reinforces the strength of its expanding market share. The question now is whether these reinvestments are being made in good faith, particularly the shareholder dividend program.

Investors can answer this by examining the cash flow statement, measuring whether free cash flow (operating cash flow minus capital expenditures) is increasing in line with the rest of the company's finances. With $185.1 billion in free cash flow, CVS has more than enough room to keep affording (and expanding) its dividend program moving forward.

All these investments and government aid will likely send CVS into another earnings beat in the coming quarters, where investors can lock in new upside opportunities for their portfolios in a less crowded stock than the other hot names in the market today.