CVS Caremark Even though stocks have been lackluster in 2011, it's been a good year for shareholders of CVS Caremark ( CVS). The $53 billion pharmacy chain's stock has rallied more than 17% year-to-date.
While CVS is best known to consumers as a retail pharmacy, the company dramatically changed its business when it acquired Caremark in 2007, adding one of the largest pharmacy benefit managers in the world to the firm's list of accomplishments. While the PBM business typically carries a dangerously narrow moat, the combination of a PBM with a successful retail pharmacy increases the competitive advantage that Caremark is able to claim. A push toward new initiatives (like in-store clinics) is keeping CVS in an enviable position, and helping to expand the firm's margins above those of a traditional retailer. This month, the company announced a 30% dividend increase, bringing its quarterly payout to 16.25 cents per share -- a 1.6% yield at current levels.