I last added to my Cardinal Health (CAH) position about 3 months ago, at $60.95/sh.  It was a small addition of 10 shares at that time.  Details on that purchase can be found my Recent Buy – CAH post from this past March.

After CAH delivered a poor earnings report in early May, its stock price dropped into the low $50s and has been hovering in that range for the better part of the last 2 months.

I’d been contemplating another add-on purchase of CAH in the low $50s when news came Thursday morning that Amazon (AMZN) was acquiring PillPack, an online pharmacy startup.  This news negatively impacted seemingly all of the retail pharmacy and drug distributor stocks, including CAH, and CVS Health (CVS) – another Portfolio holding of mine.

CAH dropped about 8% on that news, easily falling below $50/sh.  The stock hadn’t been trading that low since 2013.

The stock I was looking to add got unexpectedly less expensive, and I didn’t feel the news justified the magnitude of its price decline.

Unfortunately, CAH stock has been a dismal performer over the past year, dropping from $79 to $49, and it currently stands as the poorest performer in my Portfolio, but I have a sense that the selling may be overdone.

After some internal deliberation, I decided the time was right to acquire some additional CAH shares and bring down my average purchase price.

A turnaround may not come anytime soon, but I’ll see what improvement CAH can muster over the next quarter or two and re-evaluate my position then.

Let’s take a look at my purchase details…

 

CAH

On Thursday, 6/28/18, I purchased 30 shares at $48.95/sh, for a total of $1,468.50, bringing my total share count to 133.451 shares.

This purchase consumed the remaining proceeds from my recent sale of SCG, and some additional cash.

CAH shares were yielding ~3.89% at my purchase price.  This is well above my Portfolio average of approximately 2.65%, and even more significantly above CAH’s 5-year average yield of ~2.2%.

This purchase results in an additional $57.16 in annual forward dividend income.  This amount, added to the additional income that stemmed from my recent MO purchase, has replaced nearly all of the dividend income lost with the recent SCG sale.

As mentioned earlier, this purchase brings my CAH average share price down, but to only $68.34/sh.  Quite a ways to go before I’m profitable with this investment!

On a positive note, I made this CAH purchase on the last day before the stock went ex-dividend, so I’ll receive my enhanced CAH dividend payment in July.

 

As a bonus, here’s a look at the dividend growth history for CAH, dating back to the year 2000.

The last two or three years, the dividend growth rate has been on the decline, and this won’t be helped by CAH’s most recent annual dividend increase of ~3%.  The dividend growth will obviously be something to monitor moving forward.

 

Do you envision a gloomy future for CAH?  Or do you believe CAH has only experienced some short-term headwinds that it will eventually recover from?  Please feel free to leave your comments!