For investors looking to enhance their portfolio with dividends, kudos to them. Sturdy and ascending dividend-paying equities can yield a steady turnover regardless of the economic climate. Let’s not consider this as an opportunity exclusive to the elderly investors; even the young cohort of investors can utilize this cash stream to accumulate more equity stakes. UnitedHealth Group is one such dividend-yielding entity, offering a dividend yield of 2.8%.
Let’s imagine a scenario where an investor desires an annual income of $1,000 originating from UnitedHealth’s stock. Now, to figure out the number of shares necessary to achieve this goal, we would need to divide this desired income by the latest annual dividend, $8.84. The resultant figure is 114, suggesting that one would require ownership of 114 shares.
Given the recent trading price of $308 for UnitedHealth’s shares, the total cost for acquiring these 114 shares would be a substantial $35,112. This might look like a daunting figure for prospective investors who may not possess the means to procure 114 shares instantly.
However, here’s a different way to look at this scenario for those who are more resource-limited. Suppose you are able to secure only 32 shares at a cost just shy of $10,000. Such a position would still yield an approximate $283 as annual dividend income.
Another facet to consider is the growing nature of such dividends, implying that with time these dividends could possibly increase. Evidently, the current dividend payout of $8.84 per share has risen considerably from $6.60 in 2022 and $4.32 in 2019. So, even with merely 32 shares to your name, gradually reaching the coveted $1,000 mark as annual income is not far-fetched.
Before taking the plunge, it’s prudent for potential investors to assess whether making an investment in UnitedHealth is a judicious decision. Like with every other investment, there are advantages and drawbacks that need careful consideration.
Recent times have seen UnitedHealth coping up with substantial negative media attention. Additionally, looming uncertainties in the healthcare sector triggered by policy changes from the Washington administration pose additional threats. These changes could potentially include reduced funding for medical activities and potentially cessation of pharmacy benefits managers (PBMs).
UnitedHealth has a significant stake in this sector through its ownership of the Optum Rx PBM. Hence, these changes can potentially impact UnitedHealth’s market standing and profit margins.
Despite these setbacks, the investment case for UnitedHealth is not entirely gloomy. The company’s stock price is currently hovering around a five-year low, potentially indicating an attractive entry point for potential investors.
Moreover, the company’s recent forward-looking price-to-earnings (P/E) ratio of 14 pales in comparison with its five-year average P/E ratio of 19, further reinforcing the low valuation argument.
Those with a bullish market view interpret these challenges as transient in nature. While these investors acknowledge the firm’s problems, they also highlight that UnitedHealth maintains its status as a formidable player in the industry, continuing to generate significant free cash flow.
Consolidating all aspects, the decision to invest in UnitedHealth significantly depends on one’s individual financial circumstances, risk appetite, and long-term investment horizon. What remains unchallenged though, is the impressive nature of their growing dividends.
The post UnitedHealth Group: A Key Player in Returns via Dividends appeared first on Real News Now.
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