5 Best Insurance Dividend Stocks To Buy Now

2. Humana Inc. (NYSE:HUM)

Dividend Yield as of 10/25: 0.59%

Number of Hedge Fund Holders: 69

Humana Inc. (NYSE:HUM) shares have risen 14% year to date as the company benefits from growth in core Medicare Advantage as well as value-based care initiatives. Although Humana Inc. (NYSE:HUM)’s dividend yield as of 10/25 is only 0.59%, the company’s dividend has room to grow in the future given its expected EPS growth rate in the next five years.

Baron Funds commented on Humana Inc. (NYSE:HUM) in a Q3 Q3 2022 investor letter,

“We added to our position in Humana Inc. (NYSE:HUM), a managed health care company which we believe is benefiting from favorable secular trends, including the aging of the population, increasing adoption of Medicare Advantage over traditional Medicare, and the shift to value-based health care. Humana has two businesses, a health plan business and a health care services business. The health plan business is focused on the Medicare Advantage (MA) program, a government program under which the Center for Medicare & Medicaid Services (CMS) contracts with private sector health insurance companies to provide health insurance benefits in exchange for contractual payments from CMS. Overall Medicare enrollment is growing as the baby boomer generation ages into the Medicare program and MA is growing faster than traditional Medicare because MA companies provide additional benefits like dental, vision, and hearing coverage at no extra cost. These trends should continue to drive growth in MA enrollment for many years. Humana is a strong number two player in MA after UnitedHealth and has typically grown its MA business faster than the market.

In Humana’s health care services business, which is branded CenterWell, the company provides pharmacy services, home care services, and operates primary care clinics. Humana is one of the largest senior-focused, value-based primary care organizations and is also the largest home health organization in the country. Humana’s health care services business is higher margin and faster growing than the health plan business and should help drive margin expansion and earnings growth for the consolidated business. At a recent Investor Day, management provided a 2025 adjusted EPS growth target of $37, representing a 14% CAGR from 2022.”