Why UnitedHealth Group (UNH) Is the Best Long-Term Dividend Stock to Invest in Right Now

In the quest for reliable and growing income streams, investors often turn to dividend stocks. UnitedHealth Group (UNH), a leading diversified health care company, has consistently demonstrated its commitment to rewarding shareholders with a steadily increasing dividend. With a 15-year streak of consecutive dividend increases, UNH has proven to be a strong contender in the long-term dividend stock arena.

UNH's diversified business model, encompassing UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx, has been a key driver of its consistent dividend growth. This model allows UNH to generate stable cash flows from various segments, reducing reliance on a single source of revenue. In 2024, UnitedHealthcare contributed 57% of total revenue, while Optum segments accounted for the remaining 43%, providing a balanced revenue mix. This diversification has enabled UNH to maintain a strong payout ratio of 52.74% and increase dividends for 15 consecutive years, with a 3-year CAGR of 13.05%.



Strategic acquisitions and partnerships have also played a significant role in UNH's ability to maintain and increase dividends. UNH's acquisition of OptumRx in 2011, a pharmacy benefit manager, and its partnership with CVS Health in 2018 to create a comprehensive health care platform, have significantly enhanced its revenue streams and cost synergies. These moves have allowed UNH to consistently grow its earnings and dividends, with a 15-year streak of consecutive dividend increases. UNH's forward dividend yield of 1.38% and a payout ratio of 52.74% indicate a sustainable and attractive long-term dividend investment.



UNH's dividend growth rate has been consistently strong, with a 14-year streak of consecutive increases. Over the past 5 years, the CAGR is 14.18%, outpacing the industry median of 10.33%. Historically, UNH's dividend growth has averaged around 14.71% over 3 years and 16.14% over 5 years. This steady growth, coupled with a 1.38% dividend yield, makes UNH an attractive long-term dividend stock.

UNH's dividend payout ratio, currently at 52.74%, indicates a balance between rewarding shareholders and reinvesting in the company. A lower payout ratio allows UNH to retain more earnings for growth, potentially driving EPS expansion. Historically, UNH has maintained a consistent payout ratio, around 33.27% over the past five years, suggesting a stable dividend policy. This balance between dividend payout and reinvestment has contributed to UNH's 14.18% dividend CAGR over the past five years, demonstrating the company's ability to grow its dividend while maintaining EPS growth.

In conclusion, UnitedHealth Group's (UNH) consistent dividend growth, driven by its diversified business model and strategic acquisitions, makes it an attractive long-term dividend stock. With a strong dividend growth rate, a sustainable payout ratio, and a balanced revenue mix, UNH is well-positioned to continue rewarding shareholders with growing income streams. As investors seek reliable and growing income streams, UNH's track record and fundamentals make it an excellent choice for a long-term dividend investment.