Cardinal Health: A Dividend Aristocrat Still On Sale

Apr. 17, 2020 7:23 PM ETCardinal Health, Inc. (CAH)51 Comments

Summary

  • The company’s personal protection equipment segment is seeing increased demand as a result of the pandemic.
  • Cardinal Health has grown its dividend each year as expected and has performed admirably during our recent/current bear market or flash crash.
  • Cardinal Health’s earnings have advanced nicely and so has the dividend.
  • FAST Graphs Analyze Out loud reviewing Cardinal Health.
  • Looking for a portfolio of ideas like this one? Members of The Dividend Kings get exclusive access to our model portfolio. Get started today »

Introduction

On Nov. 22, 2017, I published an article on Cardinal Health (NYSE:CAH), here. At that time, Cardinal Health (CAH) was trading at approximately $56 per share and was paying a dividend of $1.81, representing a dividend yield of about 3.1%. Of course, a lot has changed with the world since that article was published.

When I posted the original article, I considered Cardinal Health, and I quote, “a great business on sale?” In the roughly 2 ½ years since that article was published, the stock price has fallen to $50 per share based on yesterday’s close. The following earnings and price correlated FAST Graph clearly illustrates the results since my original article was published.

Some would consider these results disappointing. However, I'm not personally disappointed in the least, because I had invested in Cardinal Health based on my confidence in the company’s dividend and dividend growth potential. So far, Cardinal Health’s dividend has delivered as promised. The following excerpt from my first article articulates my objectives and expectations when it was published – emphasis added is mine:

“To be clear, I believe that Cardinal Health is facing short-term issues that have recently generated weak earnings and cash flows. However, I also believe that the market is currently punishing the company’s stock price more than it deserves. Consequently, I suggest that Cardinal Health is an extremely undervalued and therefore attractive Dividend Aristocrat on sale. Furthermore, I do believe the company possesses above-average long-term growth potential. As a result, I would expect above-average longer-term total returns resulting from growth coupled with P/E ratio expansion. But best of all, Cardinal Health meets my current investment objective because it provides an above-average current dividend yield coupled with above-average dividend growth.

Additionally, it’s also important to point out that my investing strategy and objective is

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This article was written by

Chuck Carnevale profile picture
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Charles (Chuck) C. Carnevale is the creator of FAST Graphs. He is also Co-Founder of The Dividend Kings, along with Brad Thomas and Adam Galas (Dividend Sensei), offering a premium service on Seeking Alpha's Market Place. Chuck is also Co-Founder of an investment management firm. He has been working in the securities industry since 1970: he has been a partner with a private NYSE member firm, the President of a NASD firm, Vice President and Regional Marketing Director for a major AMEX listed company, and an Associate Vice President and Investment Consulting Services Coordinator for a major NYSE member firm. Prior to forming his own investment firm, he was a partner in a 30-year-old established registered investment advisory in Tampa, Florida. Chuck holds a Bachelor of Science in Economics and Finance from the University of Tampa. Chuck is a sought-after public speaker who is very passionate about spreading the critical message of prudence in money management. Chuck is a Veteran of the Vietnam War and was awarded both the Bronze Star and the Vietnam Honor Medal.


Disclosure: I am/we are long CAH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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