2. UnitedHealth Group Incorporated (NYSE:UNH)
Upside Potential as of January 20: 27.5%
UnitedHealth Group Incorporated (NYSE:UNH) is a Minnesota-based health insurance company that offers a wide range of related services to its consumers. The company recently announced its FY24 earnings and surprised investors with its stellar performance. It posted revenue of $400 billion, up 8% from last year. The company experiences this growth due to its expanded services across the organization. The company’s earnings from operations for the year amounted to $32.3 billion. When excluding costs related to the cyberattack response and impacts in South America, adjusted earnings from operations stood at $34.4 billion.
UnitedHealth Group Incorporated (NYSE:UNH) also met investor expectations with its strong cash flow performance. For the full year, the company generated $24.2 billion in cash flows from operations, which is 1.6 times its net income. Throughout 2024, the company returned more than $16 billion to shareholders through dividends and stock buybacks. In the fourth quarter, the company’s return on equity was 23.7%, demonstrating strong, widespread earnings and an efficient capital structure.
UnitedHealth Group Incorporated (NYSE:UNH) holds a solid dividend track record. The company started paying annual dividends in 1990 and shifted to quarterly payouts in 2010. Since then, it has raised its dividends each year, which makes it one of the best stocks with steady dividends. The company offers a per-share dividend of $2.10 every quarter and has a dividend yield of 1.60%, as recorded on January 20.
Vulcan Value Partners mentioned UNH in its Q4 2024 investor letter. Here is what the firm has to say:
“UnitedHealth Group Incorporated (NYSE:UNH), a company that we have owned several times in the past, is the largest health insurer in the United States. UnitedHealth Group also owns Optum, which is a rapidly growing healthcare services company. The environment for the health insurance business remains positive as growth in healthcare spending, driven by chronic diseases and an aging population will continue to outpace overall economic growth. The insurance business benefits from powerful network effects as more members attract more providers and vice versa, which reinforces United’s value proposition and bargaining power with each side of the network. We respect UnitedHealth Group’s management team and have been very pleased with their long-term vision and execution.”
According to Insider Monkey’s database of Q3 2024, 112 hedge funds owned stakes in UnitedHealth Group Incorporated (NYSE:UNH), compared with 114 in the preceding quarter. These stakes are valued at over $15 billion in total.
1. Comcast Corporation (NASDAQ:CMCSA)
Upside Potential as of January 20: 33.8%
Comcast Corporation (NASDAQ:CMCSA) is an American telecommunications company that offers a wide range of mobile phone and cable TV services. The company is working to expand its broadband services and improve its network infrastructure to keep up with growing consumer and business demands. By December 9, 2024, the company was providing broadband to 63 million homes and aims to reach an additional 1.2 million homes in 2025. A key goal is to deliver 1-gigabit speeds to ensure reliable, high-speed internet for activities like streaming, gaming, and other data-heavy uses. In addition, the company is implementing DOCSIS 4.0 technology, which will enhance broadband performance over hybrid fiber-coaxial (HFC) networks, supporting faster, symmetrical multi-gigabit speeds.
In the third quarter of 2024, Comcast Corporation (NASDAQ:CMCSA) reported strong earnings with $32.07 billion in revenue, marking a 7% increase compared to the same quarter last year. The company saw solid performance, including a 3.6% rise in broadband average revenue per user (ARPU) and a 5% growth in its connectivity segment. The Connectivity & Platforms division achieved an adjusted EBITDA margin of 40.9%. Moreover, Comcast’s hosting of the Paris Summer Olympics significantly boosted Peacock’s revenue and subscriber base, reinforcing NBC’s position as the leading network for the 2023-2024 season.
Comcast Corporation (NASDAQ:CMCSA) maintained a robust cash position in terms of dividends. In the most recent quarter, the company generated over $7 billion in operating cash flow, with free cash flow surpassing $3.4 billion. The company also returned $1.2 billion to shareholders through dividends. On January 7, it announced a quarterly dividend of $0.31 per share, in line with previous payouts. With 16 consecutive years of dividend growth, CMCSA is one of the best stocks with steady dividends. The stock supports a dividend yield of 3.35%, as of January 20.
Overall Comcast Corporation (NASDAQ:CMCSA) ranks first on our list of the best dividend stocks with high yields. While we acknowledge the potential for CMCSA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CMCSA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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