Thank you, UnitedHealth Group (NYSE:UNH)! In these pages last week, we called out UNH as a recession-resistant stock because the health carrier is always growing EPS at a 10% annualized rate.
Thanks to these profit gains, UNH’s dividend has been doubling every few years. Check it out: past five years, the stock’s payout has popped 120%:
Dividend Growth: +120% in Five Years
As dividends rise, they tend to “pull” their stock prices with them. Rising payouts are magnetic. They attract capital!
UNH is a perennial dividend attraction. Its payout continuously grows, so its price is always appreciating:
As I mentioned, our original timing on UNH was terrible. We added it to our Hidden Yields portfolio in January 2020—two months before the world closed!
Close Our Eyes and Buy Anytime
Our “terrible” timing worked out super well. Today we’re receiving a quarterly dividend 53% higher than when we bought just two-and-a-half years ago.
And there’s more. As the payout climbed, so did UNH’s stock price. We’re sitting on total returns of 84% (price gains plus dividends), nearly a dividend double already!
UNH is about as recession-resistant as they come. Sales soared 13% year-over-year and the company just raised its earnings outlook for the year.
We can confidently “close our eyes and buy” UNH anytime thanks to its perennial growth. Or dollar-cost average (DCA) shares during any market, bull or bear.
UNH’s perennial growth is no accident. The firm had the foresight in 2011 to start Optum, its own technology driven unit. Optum provides pharmacy benefits, runs clinics and supplies data analytics and other cutting-edge tech to streamline healthcare. Optum’s earnings have grown so quickly they nearly account for half of UNH’s total earnings today!
And let’s not sleep on UNH’s headline 1.2% yield. Dividend investors have two ways to win. With a dividend likely to double ahead, more price gains are likely to follow.
In the coming months, this stock will be the envy of investors searching for ’08-style protection. Granted, its price will not explode 6% every week. But the next 12 months look good from a fundamental standpoint (as they always do for UNH).
From now to July 2023, the company will likely deliver:
- Double-digit sales growth.
- 10%+ profit gains.
- Another generous dividend bump.
Its share price may chop with the manic markets. That’s fine. It makes UNH a perfect candidate for DCA.
Disclosure: Brett Owens and Michael Foster are contrarian income investors who look for undervalued stocks/funds across the U.S. markets. Click here to learn how to profit from their strategies in the latest report, "7 Great Dividend Growth Stocks for a Secure Retirement."