UnitedHealth Group (UNH) has not joined the bull market in 2023. The stock price is down for the year and is trading at the lower end of its 52-week range. Health insurance companies face regulatory issues, low growth, and investors flocking to large-cap tech stocks. But in adversity exists opportunity, especially when the company is as dominant as UnitedHealth.
UnitedHealth Group (UNH) is a healthcare insurer, pharmacy benefits, and consulting firm. It has four business segments: UnitedHealthcare, Optum Rx, Optum Health, and Optum Insight. UnitedHealth has become the largest private health insurer in the United States and the third-largest pharmacy benefits company. It also provides healthcare services, analytics, financial services, etc.
At the end of 2022, UnitedHealth provided medical insurance benefits to 51+ million members. It is the market leader in the United States with the No. 1 or No. 2 position in 31 States, ahead of its main competitors.
Total revenue was $324.2 billion in 2022 and $335.9 billion in the trailing twelve months.
According to Stock Rover*, the stock price has fallen (-8.7%) year-to-date and (-2.9%) in the past year after adjusting for dividends return. For perspective, the S&P 500 Index is up +20.5% in the past twelve months.
UnitedHealth is aggressively returning cash to shareholders. The company is a Dividend Contender with 14 years of increases. The dividend growth rate has been high at 17.4% in the past five years and 23.1% in the last decade. The company's payout ratio is only ~29%, suggesting many more increases to come. The dividend safety is excellent, with an 'A+' dividend quality grade.
Source: Portfolio Insight*
The poor share price performance in 2023 has made the stock undervalued. It trades below its 5-year P/E ratio range. We view this stock as a long-term buy-and-hold equity. Moreover, many ETFs and mutual funds agree because the stock is often a top 10 holding.
Source: Portfolio Insight*
Disclosure: Long UNH
Disclaimer: The author is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.