So far this year, CVS Health (CVS) has lagged behind the S&P 500 in terms of total return, reinforcing the market’s entrenched perception of the long-established healthcare company: a mature, slow-growing “plodder.”
However, this view overlooks the bigger picture. The market has focused too much on CVS Health’s low-margin pharmacy business while ignoring its ongoing transformation into a fully integrated, diversified industry giant—offering pharmacy benefit management services through CVS Caremark and health insurance through Aetna. The stock has fallen more than 3% year to date, and the market may be underestimating this evolution. Here are three reasons why this stock stands out as one of the most compelling value choices today.
CVS’s forward price-to-earnings ratio is only around 11x. The company’s revenue has grown steadily each year, rising 126.5% over the past decade. In 2025, CVS reported a record $402.1 billion in sales, a 7.8% increase, with adjusted earnings per share (EPS) rising 24.5% to $6.75. Management forecasts adjusted EPS of $7.00 to $7.20 for 2026.
This healthcare company operates three main business segments: healthcare benefits, health services, and pharmacy & consumer health. All three segments posted revenue growth of at least 9%. Aetna’s medical benefit ratio has dropped to around 91% after spiking in previous years, indicating that the company is pricing its Medicare Advantage plans more efficiently and managing costs more effectively.
With its 1,000 walk-in and primary care clinics—including MinuteClinics and approximately 230 Oak Street centers designed specifically for seniors—the company is improving medication adherence among its own insurance members and reducing hospitalization rates. This is an internal efficiency that pure-play retail companies or insurers would find difficult to replicate.
From 2017 to 2021, while repaying the $69 billion in debt incurred from the Aetna acquisition, CVS kept its dividend frozen at $0.50 per share. However, the company never cut its dividend and has raised it by 33% since 2022. The current dividend yield based on the stock price is 3.46%, with a payout ratio of 43.5%, indicating the company has the capacity to continue increasing its dividend.
The company continues to generate cash flow at a robust pace, allowing it to maintain its dividend while repaying debt. In 2025, CVS reported operating cash flow of $10.6 billion and expects at least $9 billion in cash flow for 2026.
Initially, the market expected the Centers for Medicare & Medicaid Services (CMS) to raise Medicare payment rates by only 0.9%. However, the actual rate increase was 2.48%, meaning that the company’s Aetna unit could see higher profit margins this year.
Management stated that it expects revenue of at least $400 billion this year, roughly flat compared to 2025, with adjusted EPS compound annual growth of around 15% over the next three years.
Conclusion: CVS Health is in the midst of a multi-year turnaround. If the company demonstrates continued progress when it reports first-quarter earnings on May 6, it could raise its dividend again or even initiate a share buyback program. For value investors or income-focused investors, CVS Health represents a highly attractive buying opportunity.
