UnitedHealth Group Incorporated (UNH) is a mega-cap stock that likely flies under the radar for many investors. Many may not know about the company since the company manages healthcare plans and does not really have a well-known or trendy product. But a long-term investment in United Health has provided market beating returns. In fact, in the trailing 10-years, UnitedHealth’s returns have crushed that of the S&P 500’s with and without dividends reinvested. A $10k investment 10-years ago would be about $108k today with ~26.9% average annual total return. The same investment 20-years ago would be worth $443k today with ~20.9% average annual return. So, UnitedHealth’s market performance is sustained over long periods of time.
UnitedHealth is not a Dividend King, Dividend Aristocrat, or Dividend Champion. The dividend has only been growing for the past 11 years making this stock a Dividend Contender. Furthermore, the dividend yield is only ~1.7% and so this stock does not pass the screens of investors seeking income. But UnitedHealth is the dominant player in private health insurance in the U.S. and operates worldwide. The dividend is growing at a trailing 5-year rate of over 26% and a trailing 10-year rate over 60% albeit from a low base. In addition, the payout ratio is only about 29% indicating the runway for dividend growth is long. For the aforesaid reasons and the market leading position, I view UnitedHealth as a long-term buy.