UnitedHealth Group’s recent dividend payment
In early August, UnitedHealth Group (UNH) announced that its board of directors has authorized a cash dividend of $0.90 per share in its regular quarterly meeting. The stock will go ex-dividend today, September 6. The dividend will be payable on September 18 to shareholders of record on September 7. The dividend represents an increase of 20% over its quarterly dividend of $0.75 paid during the third quarter of 2017. For fiscal 2018, the indicated annual dividend stands at $3.60.
The increased dividend reflected UNH’s increasing focus on returning value to its shareholders. The strategy is likely to attract more investors seeking income stocks. However, UnitedHealth Group’s dividend yield remains at 1.34%, and its payout ratio is 29.6% as of September 5. In comparison, peers Aetna (AET), Anthem (ANTM), and Cigna (CI) have dividend yields of 1%, 1.14%, and 0.02%, respectively.
During the first half of fiscal 2018, UnitedHealth Group paid total dividend payments in excess of $1.6 billion to its shareholders.
UNH’s capital allocation strategy
UnitedHealth Group is focused on deploying its capital for the diversification of the company through strategic mergers and acquisitions and share repurchase programs. The company registered ROE (return on equity) of ~24% for the second quarter of fiscal 2018. The board renewed its share repurchase program in June and authorized the purchase of $100 million in shares over time.
In the first half of fiscal 2018, UnitedHealth Group repurchased $3.15 billion in shares. The company has plans to make share repurchases of $3 billion–$4 billion during fiscal 2018.
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