McKesson: Consistent Dividend Payer, 170 Years Old And Going Strong

Sep. 1.11 | About: McKesson Corporation (MCK)

McKesson Corporation (NYSE:MCK) offers medicines, pharmaceutical supplies, and information and care management products and services for the healthcare industry. It operates through two segments, Distribution Solutions and Technology Solutions. Its customers include hospitals, physicians, homecare providers, retail pharmacies, and payors in North America, the United Kingdom, Ireland, other European countries, Asia Pacific, and Israel. The company was founded in 1833 and is based in San Francisco, California.

McKesson has been around for more than a 170 years and is one of the oldest corporations in America. It is the largest pharmaceutical distributor in North America, distributing one-third of the medicines used every day. It supplies more than 40,000 U.S. pharmacy locations, from Wal-Mart (NYSE:WMT) to the Department of Veterans Affairs to community pharmacies and hospitals. Basically, if you have been in a hospital or went to the local pharmacy, chances are those products were distributed by McKesson. The company's customer base in the United States includes 50% of all health systems, 20% of all physician practices, 25% of home care agencies, and 77% of health systems with more than 200 beds.

The company also develops and installs health care information technology systems that eliminate the need for paper prescriptions and paper medical records. Its software and hardware is used in more than 70% of the nation's hospitals with more than 200 beds.

Wal-Mart (WMT) is one of its largest partners and maintains a strong relationship with McKesson, having recently extended their contract with each other. The company also has a subsidiary company called Health Mart, which are independently owned pharmacies.

McKesson trades at a forward P/E of 11. The stock pays a dividend of 1%, and although it is small, it has consistently been growing it. The company is a cash cow generating billions in profits. This is a great chance to get a company with a strong installed base in the healthcare sector at a cheap price. McKesson is one of the oldest companies in the U.S. and will continue to be around for a very long time.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.