UNH: Best Time Ever To Buy For Income Investors

(11min)

Summary

  • UnitedHealth's shares have plunged, but the sell-off creates a rare opportunity: the dividend yield is at a historic high and the valuation is compelling.
  • Despite near-term headwinds—guidance withdrawal, CEO change, and reported DOJ probe—I see long-term prospects as strong, with robust earnings and dividend growth expected.
  • UNH's payout ratio is low, and dividend growth history is excellent; even conservative growth assumptions point to attractive total returns for income investors.
  • Insider buying, including the new CEO's $25M purchase, reinforces my conviction that UNH is undervalued and offers a favorable risk/reward profile at current levels.
  • Looking for a helping hand in the market? Members of Cash Flow Club get exclusive ideas and guidance to navigate any climate. Learn More »
UnitedHealthcare headquarters in Minnetonka, Minnesota, USA

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Article Thesis

UnitedHealth Group Incorporated (NYSE:UNH) has seen its shares come under a lot of pressure so far this year. But while the company has near-term problems, its longer-term outlook remains positive, I believe. Its dividend yield has not been this high

Is This an Income Stream Which Induces Fear?

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This article was written by

52.38K Followers

Jonathan Weber holds an engineering degree and has been active in the stock market and as a freelance analyst for many years. He has been sharing his research on Seeking Alpha since 2014. Jonathan’s primary focus is on value and income stocks but he covers growth occasionally.

He is a contributing author for the investing group Cash Flow Club where along with Darren McCammon, they focus on company cash flows and their access to capital. Core features include: access to the leader’s personal income portfolio targeting 6%+ yield, community chat, the “Best Opportunities” List, coverage of energy midstream, commercial mREITs, BDCs, and shipping sectors,, and transparency on performance. Learn More.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in UNH over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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