UnitedHealth Group Incorporated (NYSE:UNH) has recently revealed its plan to distribute a dividend of $1.88 per share, reaffirming its dedication to providing returns to its stockholders. This upcoming dividend is scheduled for payment on September 19, 2023, specifically to shareholders registered as of September 11.
Considering the latest payout and the closing price on August 23, the dividend yield stands at around 1.54%. This figure surpasses both the industry average of 1.31% and the medical sector average, as well as exceeding the S&P 500’s rate of 1.45%. Notably, UnitedHealth has consistently raised its dividend on an annual basis since 2010.
UnitedHealth’s proactive measures to enhance shareholder value are underpinned by its robust balance sheet and strong capacity to generate cash. By the close of the second quarter, UNH held cash and short-term investments amounting to $46.3 billion – a notable 65.8% increase from the level at the end of 2022. Concurrently, short-term borrowings and the current portion of long-term debt were at a manageable $6.3 billion. Projections indicate that the operating cash flow for 2023 will likely range from $27 billion to $28 billion, signifying growth from the $26.2 billion achieved in 2022.
These factors underscore UnitedHealth’s sound financial standing, buoyed by its profitable operations. Consequently, not only does the dividend appear sustainable, but it also allows room for potential future increases.
Investors should take note of the escalating value of Optum, UnitedHealth’s health service business, which supports the company’s diversification strategy. The substantial long-term earnings growth potential of Optum provides ample scope for future dividend enhancements. Forecasts indicate a year-over-year increase of 20.3% in Optum’s top line for 2023.
Another positive aspect for the health insurer is the upward trajectory in membership trends within UNH’s Commercial business. Additionally, the government business segment, encompassing Medicaid and Medicare Advantage, is anticipated to further drive the company’s performance in the foreseeable future. UnitedHealth has also implemented a share repurchase initiative to augment shareholder value, with up to 21 million shares remaining available as of the end of June.
Price Performance
Over the past three months, UnitedHealth shares have achieved a 2.4% increase, slightly trailing the industry’s rise of 2.9%.
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Author Faith Yakubu 
