July 25, 2025 a 03:31 pm
CAH: Dividend Analysis - Cardinal Health, Inc.
Cardinal Health, Inc. presents a complex picture with its dividend profile. With a consistent dividend history spanning 40 years, it stands as a reliable income provider. However, recent cuts in 2024 mark a shift in its stability narrative. Investors should be cautious of the company's reduced dividend growth rate.
📊 Overview
Cardinal Health operates within the healthcare sector, providing a consistent if modest dividend yield of 1.23%. With a current dividend per share of 2.04 USD, its long-standing dividend history of 40 years was interrupted by a cut in 2024, demanding a careful reassessment of its long-term income reliability.
| Sector | Dividend Yield (%) | Current Dividend Per Share (USD) | Dividend History (Years) | Last Cut/Suspension |
|---|---|---|---|---|
| Healthcare | 1.23 | 2.04 | 40 | 2024 |
🗣️ Dividend History
The company's unwavering commitment to paying dividends over four decades underscores its appeal to income-focused investors. However, the recent dividend cut raises questions about its future capacity to sustain such payments.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 1.52 |
| 2024 | 1.51 |
| 2023 | 2.00 |
| 2022 | 1.98 |
| 2021 | 1.96 |
📈 Dividend Growth
The dividend growth rates over the past three and five years show negative figures, indicating a contraction possibly due to financial restructuring or market challenges. This growth decline necessitates a reassessment for growth-focused dividend investors.
| Time | Growth |
|---|---|
| 3 years | -0.08% |
| 5 years | -0.05% |
The average dividend growth is -0.05% over 5 years. This shows moderate but steady dividend growth.
📉 Payout Ratio
Evaluating payout ratios provides insight into the sustainability of Cardinal Health's dividends. With EPS and FCF-based ratios at 31.37% and 19.93% respectively, the company maintains a disciplined payout strategy, ensuring ample coverage to reinvest back into the business.
| Key Figure Ratio |
|---|
| EPS-based 31.37% |
| Free cash flow-based 19.93% |
The payouts illustrate a balance between returning capital to shareholders and retaining earnings for future growth initiatives.
✅ Cashflow & Capital Efficiency
Cardinal Health's cash flows are critical in understanding the sustainability of its dividend and capital efficiency. Returns on invested capital have shown resilience with a ratio around 12.8%, though free cash flow yield is modest at 6.46%.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 13.57% | 9.55% | 18.75% |
| Earnings Yield | 3.56% | 1.06% | -6.39% |
| CAPEX to Operating Cash Flow | 13.58% | 16.94% | 12.40% |
| Stock-based Compensation to Revenue | 0.05% | 0.05% | 0.04% |
| Free Cash Flow / Operating Cash Flow Ratio | 86.42% | 83.06% | 87.60% |
The stable free cash flow to operating ratio underscores robust operational cash flows, vital for maintaining dividend payments and funding strategic investments.
⚠️ Balance Sheet & Leverage Analysis
Cardinal Health's balance sheet reflects a complex financial structure, accentuated by a negative debt-to-equity ratio indicative of leveraged operations unrelated to equity returns.
| Ratio | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | -1.58 | -1.65 | -7.53 |
| Debt-to-Assets | 0.11 | 0.11 | 0.12 |
| Debt-to-Capital | 2.71 | 2.54 | 1.15 |
| Net Debt to EBITDA | -0.02 | 0.46 | 4.75 |
| Current Ratio | 0.98 | 1.00 | 1.08 |
| Quick Ratio | 0.56 | 0.53 | 0.57 |
| Financial Leverage | -14.04 | -15.23 | -62.15 |
The company's considerable leverage denotes risks but also signifies potential for amplified returns if managed effectively, provided liquidity ratios remain adequate.
✅ Fundamental Strength & Profitability
Metrics such as return on equity have shown variance, with 2024 figures reflecting challenges. Nonetheless, the company maintains sufficient profitability margins in gross and net figures, vital for economic resilience.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | -0.27 | -0.09 | 1.32 |
| Return on Assets | 0.02 | 0.01 | -0.02 |
| Net Margin | 0.38% | 0.13% | -0.51% |
| EBIT Margin | 0.55% | 0.36% | -0.35% |
| EBITDA Margin | 0.87% | 0.70% | 0.07% |
| Gross Margin | 3.27% | 3.36% | 3.61% |
| R&D to Revenue | 0% | 0% | 0% |
Cardinal Health's modest margins, though consistent over the years, highlight a need for strategic innovation investments to boost long-term returns and competitiveness.
📈 Price Development
⚖️ Dividend Scoring System
| Criteria | Score (1-5) | Score Bar |
|---|---|---|
| Dividend yield | 2 | |
| Dividend Stability | 3 | |
| Dividend growth | 2 | |
| Payout ratio | 4 | |
| Financial stability | 3 | |
| Dividend continuity | 2 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 2 |
Total Score: 22/40
🗣️ Rating
Cardinal Health, Inc. offers a reliable but cautious investment opportunity. While its historical dividend reputation is commendable, recent financial challenges warrant attention. A well-balanced portfolio approach is advised, given its current restructuring and moderated growth prospects.