In a bid to enhance shareholder value, the board of directors of
UnitedHealth Group Incorporated
UNH has proposed a 20% increase in the quarterly dividend of 90 cents per share. Shareholders of record on Jun 17, 2019 are expected to receive this meatier dividend on Jun 25, 2019.
The company hiked its dividend payout by the same percentage from 75 cents per share to 90 cents last June as well. United Health’s track record of disbursing quarterly dividends and raising the payout annually appears impressive to investors. Notably, the company’s dividend trend witnessed a CAGR of 33.5% from 2013 to 2018.
Based on the closing price of $242.77 on Jun 5, 2019, the dividend yield of the company stands at 1.48%, better than the industry average of 1.18%.
The dividend raise under review is supported by the company’s strong capital structure. UnitedHealth has a healthy balance sheet with unparalleled financial flexibility, which allows investment in business.
The company has been quite aggressive when it comes to share buybacks. United Health’s strong capital position buoys investors’ confidence in the company, benefiting it going forward.
The company has also generated increased cash flows from 2009 through 2018 (declined only in 2013). For 2019, the company expects cash flow in the range of $17.3-$17.8 billion.
United Health has been witnessing a steady rise in its revenues on the back of its strong market position and attractive core business that continue to be driven by new deals, renewed agreements and expansion of service offerings. Its building up of the health services segment and international business also provide significant diversification benefits and at the same time, shields it from stringent regulation in the United States. We expect the company's solid businesses and cash generation to consistently support its dividend payments going forward.
Shares of this Zacks Rank #2 (Hold) company have lost 2.5% in the past year, wider than its industry’s dip of 1.2%.
Other Stocks to Consider
Investors interested in the medical sector can also take a look at some other top-ranked stocks like Anthem Inc ANTM, WellCare Health Plans, Inc. WCG and Molina Healthcare, Inc MOH. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Anthem and subsidiaries operate as a health benefits company in the United States. In the last four quarters, the company came up with average positive surprise of 4.76%. It carries a Zacks Rank #2 (Buy).
WellCare Health offers managed care services to government-sponsored health care programs. The company has a Zacks Rank of 2 and pulled off average positive surprise of 13.52% in the preceding four quarters.
Molina offers Medicaid-related solutions to meet the health care needs of low-income families and individuals. In the trailing four quarters, the company delivered average beat of 88.17%. It sports a Zacks Rank #1 (Strong Buy).
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