Top Picks 2017: Cardinal Health

01/16/2017 6:00 am EST


Ben Reynolds

CEO, Sure Dividends

We look for high quality dividend stocks with strong competitive advantages and shareholder friendly managements trading at fair or better prices, explains Ben Reynolds, editor of Sure Dividend.

Cardinal Health (CAH) — a healthcare services and products company operating in the pharmaceutical and medical sectors — underperformed the market by more than 20% in 2016. 

The company’s stock price fell due to intense pricing pressure within the pharmaceutical distribution industry.  That trend is set to reverse in 2017. 

Cardinal Health is a Dividend Aristocrat with a 2.5% dividend yield.  The stock has increased its dividend payments for 32 consecutive years. 

What immediately stands out about Cardinal Health is its low P/E ratio. The stock is trading for an adjusted P/E ratio of 14. 

Its average P/E ratio over the last 3 years is 20.  The stock appears significantly undervalued — and it has excellent growth prospects. 

Cardinal Health's management expects 10% to 15% earnings-per-share growth over the long run.  The stock is poised to for significant share price appreciation in 2017. 

Cardinal Health — our Top Pick for 2017 —is a high quality business with a shareholder friendly management trading for a bargain price.

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