UnitedHealth (UNH, Financial) announced its most recent quarterly dividend on Aug. 8 with an ex-dividend date of Sept. 6. The company is one of four health care companies in the Dow Jones Industrial Average and the only Dow Jones company focused on health care plans. In the S&P 500 its closest competitors by market cap include Anthem, Aetna and Humana.
Dividend
On Sept. 18, UnitedHealth will pay a dividend of 90 cents to shareholders who buy the stock before its Sept. 6 ex-dividend date. The 90-cent dividend is unchanged from the previous quarter and follows the company’s trending dividend schedule. Since 2014 the company has held the dividend steady for four consecutive quarters, increasing the dividend annually by approximately 27% each year. It last increased its dividend on June 15 from 75 cents.
The dividend announcement will bring the trailing 12-month dividend yield to 1.26% and puts the forward dividend yield at 1.38%. Over the past 12 months shareholders have received total dividends of $3.15.
Earnings
UnitedHealth has been reporting strong revenue and net income growth over the past three years, beating most of its managed health care peers.
Revenue
One-year revenue growth is reported at 8.83% with three-year annualized revenue growth at 15.52%. Of its S&P 500 competitors, revenue growth lags only Centene, which has reported one-year and three-year annualized revenue growth of 19.15% and 42.96%, respectively. UnitedHealth, however, is far exceeding gross margins of Centene with a trailing 12-month margin of 24% versus 13% for Centene.
In 2018, UnitedHealth has revenue of $11.3 billion through the first two quarters of the year. Revenue premiums for the firm are $88.5 billion, up 13% from 2017. Services is reporting the strongest revenue growth with an increase of 16% in 2018 to $8.4 billion.
Net Income
One-year and three-year net income growth for UnitedHealth has been 50.46% and 23.40% respectively. Over the past year Humana and Anthem have topped UnitedHealth in net income growth. Humana is reporting growth of 298.7% and Anthem has net income growth of 55.6%. Over the past 23 months however, UnitedHealth is still primarily the industry leader by margins with a net margin of 5.55%.
In 2018, net income for UnitedHealth is up 31% at $5.9 billion. Lower income taxes have helped the company’s bottom line. In the first half of the year, income tax expenses are down $369 million at $1.65 billion.
Return and future value
UnitedHealth’s commitment to the dividend has been helping the stock’s total return. Year to date, UnitedHealth is up 20.26% versus an increase of 7.29% for the S&P 500 and 3.49% for the Dow Jones. One-year and three-year returns are also outperforming the broad market. For the one-year period UnitedHealth has a return of 37.64% and its three-year annualized return is 30.89%.
Source: Morningstar
Analysts have a positive outlook on the stock with a few acquisition catalysts on the radar. In August UnitedHealth has reported bidding for AthenaHealth and Genoa Health. Analysts believe the stock could go to $284.50 over the next year. It is currently trading at $260.95. The acquisitions could potentially help its growth among competitors as new technologies are helping many health care companies expand their offerings and claim services for more customers online.
Disclosure: I do not directly own shares of UnitedHealth.
