UnitedHealth Group: Don't Miss Out On This Dividend Growth Beast

Company Overview - UnitedHealth Group Incorporated (UNH) is the largest player in the health insurance industry, with a market capitalization exceeding that of all its publicly listed competitors combined [3] - The company operates in a sector expected to grow significantly due to an aging global population and increasing rates of chronic diseases, with the global health insurance market projected to grow from $1.8 trillion in 2024 to $3.2 trillion by 2032, representing a compound annual growth rate of 6.2% [3] Financial Performance - In Q1 2024, UNH reported total revenues of $99.8 billion, an increase of 8.6% year-over-year, surpassing analyst expectations by $490 million [7] - The company has consistently exceeded analyst consensus for revenue and non-GAAP EPS, achieving revenue beats in 17 of the last 19 quarters and non-GAAP EPS beats in all 19 quarters leading up to Q1 2024 [7] - Adjusted diluted EPS for Q1 2024 was $6.91, reflecting a 10.4% increase from the previous year and exceeding analyst consensus by $0.29 [11] Membership and Market Segments - Total medical membership declined by 2.7% to 51.5 million, primarily due to the sale of its Brazil operations and increased redeterminations in Medicaid [9] - Domestic commercial members increased by 2.1 million, and Medicare Advantage membership rose by 2.8% to 7.8 million [10] - The number of people served through UnitedHealthcare's domestic commercial offerings and Medicare Advantage contributed to revenue growth, despite declines in global membership [8] Growth Projections - Analysts project adjusted diluted EPS to rise by 10.5% in 2024 to $27.75, with further increases anticipated in 2025 and 2026 [12] - The company's annual growth consensus is 12.2% for the next three years, supported by steady revenue growth and share buybacks [13] Valuation and Dividend Growth - UNH shares are currently trading at a P/E ratio of 18.6, below the 10-year normal P/E ratio of 20.2, suggesting potential for price appreciation [13] - The company has a five-year compound annual growth rate of dividends at 15.9%, significantly higher than the healthcare sector median of 6.6% [14] - A projected 13.3% increase in the quarterly dividend per share to $2.13 is anticipated, maintaining a sustainable payout ratio [14]