Yahoo Finance Will UnitedHealth (UNH) Dividend Hike Fail to Excite Investors?
UnitedHealth Group Incorporated UNH recently announced an increase in its dividend payout, reinforcing its commitment to enhancing stockholder returns. Its board of directors approved an 11.7% hike in the quarterly cash dividend, raising it from $1.88 per share to $2.10.
The latest dividend will be paid out on Jun 25, 2024, to its shareholders of record as of Jun 17. Its dividend yield, based on the latest payout and the Jun 7, 2024 closing price, is 1.71%. The figure is higher than the industry average of 1.39%, the medical sector’s 1.43%, as well as the S&P 500’s level of 1.27%. UnitedHealth’s dividend history shows continuous hikes per annum since 2010.
UNH's robust balance sheet, along with steady cash flow from operations over the years, underpins its initiatives to enhance shareholder value. At the end of the first quarter of 2024, the company's total debt-to-total capital ratio was 40.9%, which is better than the industry's average of 43.9%. UNH projects operating cash flow for 2024 to be between $30 billion and $31 billion, indicating an increase from $29.1 billion in 2023. This growth highlights the strength of its profitable operations.
However, not everything is rosy.
The company is currently facing some challenges, and investors still might be wary. UnitedHealth’s health services division, Optum, was impacted by a cyber-attack on Change Healthcare, a part of this business. The attack significantly affected its operating cash flows in the first quarter.
The cyberattack on Change Healthcare, a platform utilized by hospitals, doctors' offices and pharmacies, has prompted healthcare stakeholders to consider backup options. The long-term impact of this incident on UNH remains uncertain. In response to the cyberattack and the sale of its operations in Brazil, the company has revised its net profit forecast for the full year 2024.
The Zacks Consensus Estimate for 2024 adjusted earnings for UNH is currently pegged at $27.57 per share, which declined by 18 cents in the past 60 days. During this time, its earnings estimate witnessed no upward estimate revisions but nine downward movements. Also, we expect its medical care ratio to deteriorate in 2024 to 84.5% from 83.2% in 2023.
Price Performance
The stock has declined 0.3% in the past year against the industry’s 0.4% growth.
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Zacks Rank & Key Picks
UnitedHealth currently has a Zacks Rank #4 (Sell).
Some better-ranked players in the broader Medical space are Sera Prognostics, Inc. SERA, HealthEquity, Inc. HQY and Brookdale Senior Living Inc. BKD, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Sera Prognostics’ 2024 bottom line suggests a 19% year-over-year improvement. SERA‘s average earnings surprise for the past four quarters is 3.7%. The consensus mark for its current-year revenues indicates a 14.4% year-over-year increase.
The Zacks Consensus Estimate for HealthEquity’s current-year earnings implies a 30.2% increase from the year-ago reported figure. HQY beat earnings estimates in each of the last four quarters, with an average surprise of 17.2%. The consensus mark for its current-year revenues is pegged at $1.2 billion, which indicates a 15.9% year-over-year increase.
The Zacks Consensus Estimate for Brookdale Senior’s full-year 2024 earnings suggests a 38.1% year-over-year improvement. It has witnessed one upward estimate revision over the past 60 days against no movement in the opposite direction. BKD beat earnings estimates in two of the past four quarters and missed on the other occasions.
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UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
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