I'm Sticking To My Call: UnitedHealth Is Among The Best Dividend Growers

Industry Overview - Healthcare costs in the U.S. reached $4.4 trillion in 2022 and are projected to rise to $6.8 trillion by 2030, driven by various factors including an unhealthy population and high costs of new technologies [2][22] - Approximately 60% of U.S. adults have at least one chronic disease, contributing to rising healthcare expenditures [3] - The aging population is expected to increase the share of Americans aged 65 or older to nearly 25% by 2060 [3] Company Performance - UnitedHealth Group reported $99.8 billion in revenues for the first quarter, a nearly $8 billion increase from the previous year, with its UnitedHealthcare segment contributing $75.4 billion [6][7] - The company added 2.1 million new consumers in the first quarter, with significant revenue growth in its Optum Health and Optum Rx segments, increasing by 16% and 12% respectively [8][11] - UnitedHealth's Medicare Advantage program is a key growth driver, offering seniors an average of $2,400 in annual savings compared to traditional Medicare [8][11] Strategic Positioning - UnitedHealth is the largest health insurance company in the U.S. and has a history of 13-16% annual EPS growth, supported by its scale and market influence [11][16] - The company is focusing on value-based care and consumerization, aiming to enhance engagement and provide personalized care options [12][13] - UnitedHealth is leveraging AI to improve efficiencies and reduce costs, with around 500 AI applications currently in use [14] Financial Outlook - The company maintains a long-term goal of 13-16% annual EPS growth, with M&A historically contributing 3-5 points to this growth [16] - UnitedHealth currently offers a dividend yield of 1.7% with a low payout ratio of under 30% and a five-year CAGR of 15.4% [17][19] - Analysts expect EPS growth to increase from 10% in 2024 to 13% in 2026, indicating a positive outlook for the company's financial performance [19] Conclusion - UnitedHealth Group stands out as a resilient player in the healthcare sector, with strong revenue growth, a popular Medicare Advantage program, and strategic initiatives in AI and M&A [22] - The company's solid dividend growth and low payout ratio make it an attractive option for dividend-focused investors [22]