UnitedHealth Group Inc. UNH has hiked its quarterly dividend payout by 33% to 50 cents per share. That increases the yield (measured as annual divided by the price per share) to 1.7% from 1.3%, based on closing price on Jun 3. This increased dividend payout is higher than the current yields offered by the company’s biggest competitors – Anthem, Inc., Humana Inc. HUM, Cigna Corp. CI, Aetna Inc. AET.
The dividend will be paid on Jun 24, to shareholders on record as of Jun 15, 2015.
The dividend hike comes on the back of UnitedHealth’s strong balance sheet with moderate leverage and its ability to generate significant cash flows. The last concluded quarter saw a cash flow of $2.3 billion, up 61% year over year.
UnitedHealth has regularly been paying dividends over the past several years. This dividend hike once again affirms the U.S. health insurer’s commitment to return more to its shareholders.
UnitedHealth’s five-year average dividend yield of 1.4% is higher than the industry average yield of 1%. Also, the five-year dividend growth rate of 74% for the industry is significantly lower than the insurer’s 116% over the same period.
In Jun 2014, the health insurer announced a hike of 34% in its quarterly dividend to 37.5 cents per share.
The company has successfully dealt with the changes brought about in the health care space by the latest federal law that aims to cover millions of uninsured people. This has, therefore, made the stock much more reliable, giving the investors greater confidence in it. UnitedHealth, in turn, has lived up to the expectations of its shareholders through consistent dividend hikes and share buy backs.
UnitedHealth currently holds a Zacks Rank # 2 (Buy).
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