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UnitedHealth raises dividend by 34%

NEW YORK — UnitedHealth Group is again raising the quarterly dividend it gives shareholders, by more than 30 percent, with the latest increase tripling the initial value of a payout the nation’s largest health insurer debuted in 2010.

The company will pay a cash dividend of 37.5 cents per share on June 25 to stockholders of record as of June 16 — up nearly 10 cents from the current 28 cents per share.

UnitedHealth in 2010 became the first health insurer to offer more than a token payout to shareholders when it started providing a quarterly dividend of 12.5 cents per share. It has since increased the dividend 30 percent or more each year, as it stock price grew.


The new dividend will bump the yield up to 1.9 percent from about 1.4 percent, based on Tuesday’s closing stock price. The yield is calculated by dividing the annual dividend by the stock price.

That new yield matches the average for Standard & Poor’s 500 index companies.

A total of 209 companies in the S&P 500 have raised their dividend this year, said Howard Silverblatt, senior index analyst for S&P Dow Jones Indices. They have increased payouts 15 percent, on average, not counting those that have doubled.

Companies often look to spend the cash they pile up from strong performances on dividends or stock buybacks. If the share price grows, they can face shareholder pressure to raise the payout and avoid diluting the yield. UnitedHealth’s stock is up 28 percent since June 4, 2013, the day before its last dividend increase.

Investors have turned to health insurance stocks in recent years as the health care overhaul has unfolded and uncertainty about the law’s effect on that sector has dissipated.

Investors also like UnitedHealth for its business diversity. Health insurance is the company’s largest business, but it also sells information technology services and pharmacy benefits management. And UnitedHealth is the largest provider of Medicare Advantage plan.


UnitedHealth also renewed its share buyback program, authorizing the purchase of 100 million shares over time.

In April, the insurer said government budget cuts and costs of the health care overhaul and contributed to an 8 percent drop in first-quarter earnings. Still, it earned $1.1 billion on $31.71 billion in revenue.