McKesson Raises Quarterly Dividend 14.6% to $0.94

McKesson Corporation raised its quarterly dividend 14.6% to $0.94 per share from $0.82. The latest ex-dividend date was September 1, 2026, and the indicated annual dividend is $3.76 per share.

Why the dividend changed

Management presented the increase as an expression of financial strength and a disciplined capital-allocation policy. Chair and Chief Executive Brian Tyler said the company remained committed to returning capital while funding its strategic priorities. McKesson did not tie the increase to a mechanical payout target or a one-time transaction. The board retains discretion over future payments, which depend on earnings, financial condition, capital requirements and other factors, according to the company’s dividend announcement and quarterly filing.

The operating backdrop supports that explanation. Fiscal first-quarter revenue rose 8% to $105.4 billion, while adjusted earnings per diluted share increased 20% to $9.93. Growth in North American Pharmaceutical and Oncology & Multispecialty, together with a lower share count, drove adjusted earnings. McKesson raised fiscal 2027 adjusted earnings guidance to a range of $44.20 to $45.00. Chief Financial Officer Kenny Cheung attributed the higher outlook to first-quarter performance, operational momentum and disciplined capital allocation, according to the quarterly results.

Cash flow was less favorable in the quarter. McKesson used $220 million of operating cash and spent $152 million on capital expenditures, producing negative free cash flow of $372 million. That quarterly result did not prevent the increase, but it makes the low earnings payout ratio important when assessing recurring coverage. The company also continued to emphasize share repurchases alongside the dividend, showing that the cash payment remains one part of a broader capital-return program.

The decision came during a portfolio reshaping. McKesson is preparing to separate Medical-Surgical Solutions as Wellverse and has sold a minority interest in that operation to Apollo funds. It also agreed to acquire Precision Medicine Group for approximately $2.25 billion, subject to regulatory clearances, to expand clinical research and commercialization services within Oncology & Multispecialty. McKesson did not identify either transaction as the cause of the dividend increase. They are competing capital demands to monitor rather than adjustments that changed the dividend mechanically. McKesson described the acquisition here.

Dividend track record

The new payment extends McKesson’s dividend-growth streak to 18 consecutive years. Its last annual cut occurred in 1999. The record therefore spans multiple business cycles, although the earlier reduction remains part of the company’s long-term history.

Recent payments show a regular pattern of annual step-ups. The quarterly rate was $0.71 on the December 2, 2024, March 3, 2025, and June 2, 2025, ex-dividend dates. It moved to $0.82 beginning with the September 2, 2025, ex-dividend date and stayed there through June 1, 2026, before increasing to $0.94 for September 1, 2026.

Full-year totals reinforce the pattern. Payments rose from $1.66 in 2020 to $1.78 in 2021, an increase of 7.2%. The total then advanced to $2.02 in 2022, $2.32 in 2023, $2.66 in 2024 and $3.06 in 2025. Those annual increases were 13.5%, 14.9%, 14.7% and 15.0%, respectively. The five-year annualized dividend growth rate is 13.0%, indicating that recent increases have been materially faster than the 2021 step-up.

Is the dividend covered?

The dividend consumes 9% of earnings. That leaves a wide accounting-earnings cushion for reinvestment, acquisitions, debt obligations and share repurchases before the common dividend would absorb a large portion of profit.

SmarterDividends rates the dividend A with a safety score of 96. The A grade means very safe, corresponding to a score from 80-100. The assessment is consistent with the low earnings payout ratio and the 18-year growth record. The negative free cash flow reported for the latest quarter remains relevant, but one quarter does not override the broader coverage measures embedded in the safety assessment.

Yield and valuation

At a share price of $883.09, McKesson’s forward yield is 0.43%. That is well below the Healthcare sector median forward yield of 1.80%. The dividend therefore supplies relatively little current income despite its double-digit growth history and high safety grade.

SmarterDividends estimates fair value at $1,406.01 and classifies the shares as undervalued. The valuation assessment is separate from dividend coverage: the 9% payout ratio measures the burden on earnings, while the fair-value estimate compares the share price with an estimate of underlying value.

What to watch

McKesson is scheduled to report fiscal second-quarter 2027 results after the market closes on November 4, 2026, followed by an investor call. The report will provide an update on guidance, operating momentum and cash generation after the first quarter’s negative free cash flow. The company announced the reporting date on September 23, 2026.

Investors can also track regulatory clearance and closing conditions for the Precision Medicine Group acquisition, progress on the Wellverse separation, and the balance between strategic investment, repurchases and quarterly dividends. The board’s next regular dividend declaration will indicate whether the new $0.94 rate is maintained, while the 9% earnings payout ratio provides the current reference point for coverage.