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Is UnitedHealth (UNH) a Good Dividend Stock Choice for You?
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UnitedHealth Group Incorporated (UNH - Free Report) recently announced a dividend payout of $1.88 per share, maintaining its commitment to stockholder returns. The latest dividend will be paid out on Sep 19, 2023, to its shareholders of record as of Sep 11.
Its dividend yield, based on the latest payout and the Aug 23 closing price, is approximately 1.54%. The figure is higher than the industry average of 1.31% and the medical sector, as well as the S&P 500’s level of 1.45%. UnitedHealth’s dividend history shows continuous hikes per annum since 2010.
Its shareholder value boosting efforts are backed by a strong balance sheet and a healthy cash-generating ability. UNH exited the second quarter with cash and short-term investments of $46.3 billion, which soared 65.8% from the 2022-end level, while the short-term borrowings and current portion of long-term debt were at a manageable $6.3 billion. It expects operating cash flow for 2023 to be within $27-$28 billion, implying growth from $26.2 billion in 2022.
This highlights UNH’s sound and stable financial position, backed by its strong profitable operations. As a result, the dividend not only looks quite sustainable but also leaves enough scope for future dividend hikes.
Investors should note that Optum, UnitedHealth’s health service business, is becoming increasingly valuable and supports its diversification strategy. Its long-term earnings growth potential provides ample capacity to up the dividend for years to come. Our estimate for Optum's top line suggests an increase of 20.3% year over year in 2023.
An uptrend in membership trends in UNH’s Commercial business is also a major positive for the health insurer. Moreover, UnitedHealth’s government business, which consists of Medicaid and Medicare Advantage, is expected to continue boosting its performance in the coming days. The company also has a share repurchase program in place to enhance shareholder value, which had up to 21 million shares capacity left at June-end.
Price Performance
UnitedHealth shares have gained 2.4% in the past three months compared with the industry’s 2.9% rise.
The Zacks Consensus Estimate for Select Medical’s 2023 earnings indicates a 55.3% year-over-year increase to $1.91 per share. It has witnessed one upward estimate revision over the past week against no movement in the opposite direction. The consensus mark for SEM’s 2023 revenues indicates 4.2% growth from a year ago.
The Zacks Consensus Estimate for HCA Healthcare’s 2023 bottom line suggests a 9.1% increase from the prior-year levels. HCA has witnessed seven upward estimate revisions in the past 30 days against none in the opposite direction. It beat earnings estimates in three of the last four quarters and missed once, with the average surprise being 5.4%.
The Zacks Consensus Estimate for Atai Life Sciences’ current-year earnings indicates a 16.3% improvement from the year-ago reported figure. It has witnessed four upward estimate revisions over the past week against no movement in the opposite direction. ATAI beat earnings estimates in two of the last four quarters, met once and missed the same on the other occasion.
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Is UnitedHealth (UNH) a Good Dividend Stock Choice for You?
UnitedHealth Group Incorporated (UNH - Free Report) recently announced a dividend payout of $1.88 per share, maintaining its commitment to stockholder returns. The latest dividend will be paid out on Sep 19, 2023, to its shareholders of record as of Sep 11.
Its dividend yield, based on the latest payout and the Aug 23 closing price, is approximately 1.54%. The figure is higher than the industry average of 1.31% and the medical sector, as well as the S&P 500’s level of 1.45%. UnitedHealth’s dividend history shows continuous hikes per annum since 2010.
Its shareholder value boosting efforts are backed by a strong balance sheet and a healthy cash-generating ability. UNH exited the second quarter with cash and short-term investments of $46.3 billion, which soared 65.8% from the 2022-end level, while the short-term borrowings and current portion of long-term debt were at a manageable $6.3 billion. It expects operating cash flow for 2023 to be within $27-$28 billion, implying growth from $26.2 billion in 2022.
This highlights UNH’s sound and stable financial position, backed by its strong profitable operations. As a result, the dividend not only looks quite sustainable but also leaves enough scope for future dividend hikes.
Investors should note that Optum, UnitedHealth’s health service business, is becoming increasingly valuable and supports its diversification strategy. Its long-term earnings growth potential provides ample capacity to up the dividend for years to come. Our estimate for Optum's top line suggests an increase of 20.3% year over year in 2023.
An uptrend in membership trends in UNH’s Commercial business is also a major positive for the health insurer. Moreover, UnitedHealth’s government business, which consists of Medicaid and Medicare Advantage, is expected to continue boosting its performance in the coming days. The company also has a share repurchase program in place to enhance shareholder value, which had up to 21 million shares capacity left at June-end.
Price Performance
UnitedHealth shares have gained 2.4% in the past three months compared with the industry’s 2.9% rise.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
UnitedHealth currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical space are Select Medical Holdings Corporation (SEM - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Atai Life Sciences N.V. (ATAI - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Select Medical’s 2023 earnings indicates a 55.3% year-over-year increase to $1.91 per share. It has witnessed one upward estimate revision over the past week against no movement in the opposite direction. The consensus mark for SEM’s 2023 revenues indicates 4.2% growth from a year ago.
The Zacks Consensus Estimate for HCA Healthcare’s 2023 bottom line suggests a 9.1% increase from the prior-year levels. HCA has witnessed seven upward estimate revisions in the past 30 days against none in the opposite direction. It beat earnings estimates in three of the last four quarters and missed once, with the average surprise being 5.4%.
The Zacks Consensus Estimate for Atai Life Sciences’ current-year earnings indicates a 16.3% improvement from the year-ago reported figure. It has witnessed four upward estimate revisions over the past week against no movement in the opposite direction. ATAI beat earnings estimates in two of the last four quarters, met once and missed the same on the other occasion.