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UnitedHealth (UNH) Rewards Shareholders With 13.8% Dividend Hike

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UnitedHealth Group Incorporated UNH recently announced a hike in dividend payout, maintaining its commitment to increase the stockholder returns. This move also highlights UNH’s sound and stable financial position.

The board of directors approved a dividend hike of 13.8%, raising the quarterly cash payout from $1.45 per share to $1.65. In June 2021, UNH increased the quarterly dividend 16%. The latest dividend will be paid out on Jun 28, 2022, to its shareholders of record as of Jun 20, 2022. The dividend yield, based on the latest payout and the Jun 8 closing price, is approximately 1.3%, higher than the industry average of 1%.

UnitedHealth’s dividend history shows continuous hikes per annum since 2010. UNH’s strong balance sheet, marked with consistent cash generated from operations over the years, supports its shareholder value boosting efforts. Its total debt to total capital of 34.9% at the end of the first quarter of 2022 compares favorably with the industry's figure of 36.8%. UNH expects operating cash flow for 2022 to be within $23-$24 billion, implying growth from $22.3 billion in 2021. Its strong profitable operations are noteworthy in this regard.

UnitedHealth’s health service business, branded as Optum, is becoming increasingly valuable. It is also crucial to its diversification strategy. The primary drivers for Optum are pharmacy care services, care delivery, technology, government services and international operations. Its long-term earnings growth potential provides ample capacity to up the dividend for years to come. Also, UNH has been aggressively repurchasing shares for a while. Management expects a share buyback of $5-6 billion this year.

Price Performance

The stock has rallied 23.1% in the past year, outperforming the industry’s 21.2% rise.

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Zacks Rank & Other Key Picks

UnitedHealth currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks in the medical space are Select Medical Holdings Corporation SEM, Omega Therapeutics, Inc. OMGA and Progyny, Inc. PGNY, each carrying a Zacks Rank of 2 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 earnings is currently pegged at $2.19 per share. SEM has witnessed one upward estimate revision in the past 60 days against none in the opposite direction.

Select Medical’s earnings beat estimates in each of the last four quarters, the average being 42%.

The Zacks Consensus Estimate for Omega Therapeutics’ earnings indicates a 28.9% increase from the prior-year reported number. OMGA has witnessed three upward estimate revisions and no downward movement in the past 60 days.

Omega Therapeutics’ earnings beat estimates twice in the last four quarters and missed the mark on the other two occasions.

The consensus estimate for Progyny’s 2022 bottom line has improved 4.5 times in the past 60 days. PGNY has witnessed three upward estimate revisions during the same time period against none in the opposite direction.

Progyny’s earnings beat estimates in each of the last four quarters, the average being 169.7%.


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UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
 
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Omega Therapeutics, Inc. (OMGA) : Free Stock Analysis Report
 
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