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Why Does UNH Have a Downward Sloping Dividend Yield Curve?

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Revenue and EPS of United Health Group

United Health Group (UNH) recorded 18% revenue growth in 2016 versus 20% in 2015. Every reportable segment including OptumHealth, OptumInsight, and OptumRx, drove the growth. The 9% revenue growth in 1H17 came from all the segments. United Health Group posted 21% earnings per share (or EPS) growth in 2016 compared to almost 6% growth in 2015. The company achieved this growth despite the higher operating and interest costs. The company recorded 31% EPS growth in 1H17 despite higher operating and interest costs. The company has maintained a good annual free cash balance and decreased its share buybacks.

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Dividend trajectory of United Health Group

As the chart below shows, the dividend yield of United Health Group sloped downwards despite the increase in dividends per share. This is due to the rise in the company price offsetting the impact of the dividend increase. United Health Group has a dividend yield of 1.5%, and its prices have risen 25.3% on a YTD basis. This figure compares to a dividend yield of 2.3% and YTD price gains of 14.7% from the Dow Jones Industrial Average (DJIA-INDEX) (DIA). The S&P 500 (SPX-INDEX) (SPY) has a dividend yield of 2.4% and YTD price gains of 13.3%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has a YTD price gain of 21.4%.

The WisdomTree US Dividend Growth Fund (DGRW) is a dividend ETF with exposure to United Health Group. It offers a 2.7% dividend yield and a PE of 20.3x. The iShares Core Dividend Growth ETF (DGRO) is a dividend ETF with exposure to United Health Group. It offers a 2% dividend yield and a PE of 20.6x.

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