UnitedHealth Group Inc UNH Has Significant Growth Potential

UnitedHealth Group Inc (NYSE:UNH) is a financially stable healthcare company that pays a stable dividend and has recorded positive growth in the past. Over the past five years, UnitedHealth has seen its stock price increase from around $60 to trade at $195 currently.

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Article Summary

UnitedHealth Group has performed exceptionally in the past seven years.

The healthcare company pays a stable dividend.

The company has significant growth prospects in future.

Here’s the trading report for UNH


The company’s health services revenues have also grown significantly while its distribution has risen by over 250% in the past five years.

United Healthcare operates through two business divisions, which are its health benefits program and its Optum services division. The company provides health benefits for employers, retirees and their families, military personnel, individuals and Medicare beneficiaries among others.

The Optum Services division operates in three segments, which are OptumHealth for healthcare delivery and population health management; OptumInsight for technology, health information, consulting and services and OptumRx for the management of pharmacy benefits.

The two platforms work hand in hand to ensure that United Healthcare provides the best services to its clients. The Optum division contributes about 35% of UNH’s overall revenue, while the health benefits division contributes 65% on the company’s overall revenues.

The company’s future prospects are quite great given the aging population in the United States, whose health management will utilize many of the health services provided by United Healthcare’s Optum division. On the flip side, the total number of benefits paid by the health benefits program will increase, which could cut into the company’s overall revenues.

The healthcare industry is experiencing immense growth due to the changing demographics in the USA and United Healthcare is well positioned to benefit from the growth in this industry. Despite the fact that its health benefits program might have to pay out more benefits due to the country’s aging population, the company is likely to benefit from more contributions by younger consumers.  

The company is not only growing its revenues, but its earnings per share are also rising. This is evidence of real sustainable growth given that earnings per share and dividend yields typically decline when a company’s stock price rises.

The company has increased its dividend payout for the last seven years, which makes it a good dividend stock. Therefore, the question remains whether UNH is a good growth stock despite the fact that it currently trades at a high multiple.

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