3. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 114
5-Year Average Annual Revenue Growth Rate: 10.32%
5-Year Average Payout Ratio: 34.5%
UnitedHealth Group Incorporated (NYSE:UNH) is a Minnesota-based health insurance company that offers related services to its consumers. Over the past ten years, the company has demonstrated itself as an exceptional investment, yielding nearly 570% returns and consistently exceeding the broader market, providing investors with significant gains. This track record underscores that investing in a top healthcare firm can be a dependable strategy for achieving strong and consistent returns, particularly as spending in the sector is projected to keep rising in the future.
UnitedHealth Group Incorporated (NYSE:UNH) has successfully attracted investors through its expansion strategies. In recent years, the company has expanded into related sectors, including home healthcare and analytics, to further diversify its operations. These initiatives are designed to provide greater value to both its partners and patients. Andvari Associates highlighted the strengths of the company in its Q2 2024 investor letter. Here is what the firm wrote:
“UnitedHealth Group Incorporated (NYSE:UNH) is one of the largest providers and distributors of services in the $5 trillion U.S. healthcare market. The company provides services to employers, individuals, and those eligible for Medicare and Medicaid. United’s Optum segment provides pharmacy benefit services and a slate of other insights and services to the major players in the healthcare space: physicians, hospitals, government agencies, and life science companies.
This is a company that provides essential services and has a strong wind at its back. Over two million people are enrolling in Medicare and Medicare Advantage every year. With the increase of healthcare spending every year, the value of the services and insights provided by Optum will only increase. United is a solid business with a high teens returns on its capital. After reinvesting in its businesses, United will likely return $16 billion in 2024 in the form of dividends and share repurchases off a revenue base of ~$380 billion.”
These initiatives have greatly contributed to the growth of UnitedHealth Group Incorporated (NYSE:UNH) over the years. Since 2011, the company’s revenue has more than tripled, increasing from just over $101 billion to nearly $372 billion by 2023. In the second quarter of 2024, UnitedHealth reported revenue of $98.8 billion, marking a 6.41% increase compared to the same period last year. In addition, its operating cash flow reached $6.7 billion, which is 1.5 times its net income.
UnitedHealth Group Incorporated (NYSE:UNH), one of the best stocks to buy, has been growing its dividends for 15 consecutive years. The company currently pays a quarterly dividend of $2.10 per share and has a dividend yield of 1.46%, as of September 19. It has a low 5-year average payout ratio of 34.5%.
According to Insider Monkey’s database of Q2 2024, 114 hedge funds, growing from 104 a quarter earlier, owned stakes in UnitedHealth Group Incorporated (NYSE:UNH). These stakes have a consolidated value of over $12.5 billion. Orbis Investment Management was one of the company’s leading stakeholders in Q2.
