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A health insurance giant, UnitedHealth Group serves more than 75 million people worldwide.
Dividends500 tracks the 200 strongest dividends in the S&P 500. To qualify as a strong dividend, the company must meet two simple requirements:- A payout ratio below 50%- An increasing dividend from the prior yearBecause there are more than 200 dividend paying companies in the S&P 500 that meet these requirements, the qualifying companies with the largest dividend yields were chosen. Dividends500 intends to test this FactSet article, which highlights these strong dividend paying companies and their outperformance versus the S&P 500 as a whole (Page 12).http://www.factset.com/websitefiles/PDFs/dividend/dividend_12.16.13If you have questions or see something you think is inaccurate feel free to let me know.
Screen: Over $10B, Top 10% EBIT/EV, Z Score >1.81
good buying opportunity after recent dip
An aging population and more people being forced to buy insurance.
Strong product and market leader in a growing field.
Poor customer service, extreme website failures, lack of communication in business areas.
I happen to use United Healthcare (AARP) as my Medigap provider. They pay the 20% that Medicare doesn't, they're thorough, easy to talk to,
For reference point and to allow for comments by others. As of the end of March, 2013.ROE 17.13%%Trailing PE 12.20PB 2.06Div yield 1.40%
Im closing out everything and starting again. 2 reasons. I pretty much abandoned this "portfolio". When I kept up with it, it did good but now I don't do anything so that's the main reason. Ill keep this stock because it's the one of the biggest healthcare insurers and obamacare was written by companies like this so what do people think is gonna happen.. better care care and less profits for the providers and insurers.. haha, yeah right. Anyway, I'll keep this one and some favorites but that's about it
Insurers are not well positioned yet to deal with increasing hospital negotiating power
See pitches by Munchies101 and TheDumbMoneyalso, UNH is the undisputed leader of this industry, they have consistently great returns on equity, very consistent earnings and cash flow growth, and can be bought today at a fair to cheap price. If there's a storm in this space as a result of Obamacare, this beast will have the strength to weather it. Conversely, if there's a boom in this space due to Obamacare, UNH will be a big part of it. UNH has serious scale and network advanatges.
Buy long UNH shares in blocks of 100 & go short out of the money 2014/2015 calls with a premium of $5 – $7. Along with current dividend income & above average option premium these shares should generate plausible returns.http://holding.amijag.com/2013/01/unh/
United Health Group company control or provides private medical insurance services to over 27 million private customers, has operations in gov. services (Medicare and Medicaid) for over 11 million seniors and 4 million beneficiaries respectively. They just won a US Dept. of Defense "TriCare" contract for 5 years as of July 2012. *copy/click link for details: http://seekingalpha.com/article/950571-unitedhealth-group-new-coverage-with-70-price-estimate?source=marketwatch
From all that I read online and in the press,United Health Group was/is very proactive to deal with Obamacare and with it being upheld AND/OR overturned. So, they will be doing better than okay. They are also very aggressively focusing on the public sector (a growth market if ever there was one). Their management style is "cut-throat" and very bottom line oriented and that mostly benefits the stockholders.
This is my largest holding in my portfolio to date, so I thought I would add my $0.02. There are many items to consider when buying a company such as UHC. The area that gets the most press is the macro environment surrounding this industry. I just want to touch on a few that intertwine to make an interesting conclusion. This industry is now profit capped at 15-20% (depending on the size of the people being insured). In other words, only $0.15 on the dollar for medical care can go to the insurance company. They will be spread capped by 200%, which means they can only charge a 200% difference between the sickest and healthiest people (causing overall rates to go up). You can no longer deny on preexisting conditions, and there is the omnipresent individual mandate. It is worth noting the individual mandate has no teeth, it maxes out at 2.5% of your income by 2016, and for a normal American, that is much less then insurance.Let’s intertwine this: You are a healthy young adult, and insurance rates are high because the spread dictates you can only charge a certain gap between the healthiest and sickest. On top of that the insurance company can only charge so much because they can only make $0.15 on the dollar for the medical cost. You have the option of paying for insurance, which is expensive, or pay a penalty of 2.5%. What’s to stop you from paying the penalty, wait until you get really sick, and buy insurance on the way to the hospital because they can’t deny you on preexisting conditions? This is an issue that will come up in 2016 when most of these laws come into effect in full. The healthiest will stay out of the market and pay the penalty, while the sick will stay on their insurance further driving up rates.There’s also the issue of the state run exchanges, no one knows how that will in the end work itself out.This all seems bad. Very bad. But you have to think about it this way; every company is playing by these rules. It is almost impossible for a new company to enter this market: the profits are so small that you need scale in order to accrue any sort of meaningful profit. Reform in effect created an oligopoly, where only the big boys can compete.Who’s the biggest boy? Who’s in the best financial situation? Who in the group can weather almost any storm? That’s UHC.We are no longer going to see the tremendous growth we saw in the past, reform and economics of scale are going to curb that (side note, they are investing in higher yield areas through their optum companies, we’ll see how that plays out), but we are going to see a stable company, with stable growth in price and dividend. This stock has become a stalwart, and monster of one at that. No one can compete with this company, and it’s almost guaranteed no one else will enter to compete with them. I don’t know about you guys, but I like investing in monopolies, they tend to make a lot of money.The nice thing about this is that it is pretty modestly priced as well. Forward PE of 9, PB of 2, price to free cashflows of 11. This is not a bad price to pay for a company that will demolish the playing field in the future. Very low risk, good odds of a solid return, and a chance they will make a killing in the future. I like that.Disclaimer: My opinion is worth exactly what I charged and please ignore everything I say.
Whether it's "obamacare", "Romenycare", or "Die-Screaming-Indigent-Scum--Care", there's gonna be UNH. They are now moving in the health records tech, potentially challenging ESRX and SXCI. That will be a real scrap, but they have the resources to make a beach head.
High ROE and net margin for a health insurer. Debt/equity is also very healthy, and considering the strong annual earnings growth one can expect over the next few years of between 10-12%, UNH is due for a run.
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