In its concerted efforts to enhance shareholder value, the board of directors of UnitedHealth Group Incorporated (UNH - Free Report) recently announced that it will propose a 20% increase on the quarterly dividend of 75 cents per share. Shareholders as of record on Jun 18, 2018 are expected to get the meatier dividend on Jun 26, 2018.
Last June too, the company had hiked its payout by same percentage from 62.5 cents to 75 cents. UnitedHealth has an impressive track record of disbursing quarterly dividends and raising the payout annually, thus witnessing a five-year CAGR of 35.78%.
The company’s current dividend yield of 1.21% is higher than 1.06% for the industry.
Apart from higher dividends, this diversified health and well-being company’s share repurchase program has also been renewed for lowering share counts and boosting its bottom line. The company has been authorized to buy back 100 million shares or approximately 10% of its outstanding shares. This decision by UnitedHealth’s board members would replace the Jun 2014 share buyback program under which, there were around 29 million shares left for repurchase as of May 31, 2018.
This dividend hike is supported by the company's strong balance sheet with increasing cash flows from the past several years (except 2013), a trend which continued in the first quarter of 2018 (cash flow from operations soared 60% year over year).
The company has been quite aggressive when it comes to share buybacks. UnitedHealth’s strong capital position cements investors’ confidence in the company, benefiting it going forward.
In the past year, shares of the company have surged 36.9%, outperforming the industry’s growth of 28.8%.
Earlier in February, another company in the same space, Humana Inc. (HUM - Free Report) , increased its quarterly dividend by 25%. Prior to that in January, Anthem Inc. (ANTM - Free Report) hiked the same by 7.1%.
Zacks Rank & Another Key Pick
UnitedHealth holds a Zacks Rank #2 (Buy). Another stock worth considering from the same space is WellCare Health Plans, Inc. (WCG - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.
WellCare provides managed care services for government-sponsored health care programs. With an impressive Zacks Rank #1 (Strong Buy), it pulled off an average trailing four-quarter positive earnings surprise of 51.70%.
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