Hey, Zach Here!

A top dividend growth stock is selling off…

Today’s topics:

1. A Great Buying Opportunity for UNH stock?

2. New Dividend Raises

3. My $390.90 dividend week

The Key Story

UnitedHealth Stock Crashes 50% - Buy The Dip on UNH?

One the best dividend growth stocks of all time, UNH, just rocketed to the top of my watchlist. 🚀

It’s now down -45.54% from the 200 day price average.

Is this a buying opportunity? Well, first let’s evaluate why the stock sold off.

Reasons for Sell-off

• Guidance Cut: UnitedHealth slashed its 2025 profit forecast, lowering adjusted earnings guidance to $26-$26.50 per share from $29.50-$30 per share. This major revision was due to higher-than-expected healthcare usage by older Americans enrolled in Medicare Advantage plans and lower government reimbursements ^[source].

• Regulatory Scrutiny: The company faced a reported criminal investigation by the U.S. Department of Justice into possible Medicare fraud, although UnitedHealth stated it had not been informed of such a probe ^[source].

• Management Changes: CEO Andrew Witty stepped down, and the company withdrew its 2025 guidance, which led to a significant drop in stock price. This was compounded by a securities class action lawsuit alleging misleading statements by the company ^[source].

Opportunities

• Markedly cheaper valuation after the sell-off – the stock now trades around ~9× forward earnings, well below its long-term average, so a “re-rating” back to historical multiples could deliver a 25--30 % rebound if fundamentals prove intact.

• Scale advantages & diversified platform – as the largest U.S. managed-care company, UNH pairs its insurance arm with Optum’s pharmacy-benefit, data-analytics and care-delivery businesses, giving it cost leverage and multiple profit sources.

• Structural tailwinds from rising healthcare costs – even with flat membership growth, medical-cost inflation flows through to revenue, sustaining mid-single-digit top-line growth over time.

• Resilient cash generation – steady free cash flow supports dividends, buybacks and bolt-on acquisitions, cushioning periods of volatility.

• History of weathering regulatory scares – political heat on managed care recurs every few years; so far UNH has continued to post solid earnings once headline risk fades.

Risks

• DOJ/Medicaid fraud investigation – potential fines, clawbacks or operating restrictions could hit earnings and damage reputation.

• Leadership & guidance uncertainty – the abrupt CEO resignation and withdrawal of guidance raise questions about internal controls and near-term visibility.

• Regulatory & political pressure – bipartisan scrutiny of insurer margins, possible reimbursement cuts or pricing caps could compress the medical-loss-ratio and profitability.

• Limited organic growth runway – with U.S. insurance penetration already high, volume growth is scarce; earnings rely heavily on managing cost trends, where mis-estimates can cause sharp downside.

• “Unknown unknowns” in earnings quality – if investigations uncover systemic issues (similar to past healthcare fraud cases), profits could be restated and the share price fall another 30--50 %.

• Sentiment & momentum reversal – Wall Street typically shuns uncertainty; until the investigation and earnings outlook are clarified, the multiple may stay depressed.

Conclusion

The combination of disappointing earnings guidance, regulatory challenges, and management upheaval has led to a significant sell-off in UnitedHealth's stock in 2025. Despite these challenges, the company is taking steps to address the issues and remains optimistic about its long-term growth prospects.

If UNH weathers this storm, then this could represent a historic buying opportunity for the stock. The dividend yield is now at the highest level ever at 2.88%.

This is a company with a history of reliable dividend raises. In fact, the 10 year dividend CAGR is +18.80%. The most recent increase was +11.70%.

🚀 New Dividend Raises:

Dividend stocks continue to grow dividend payments. That includes top stocks owned by Warren Buffett like Chubb.

• $FRME - First Merchants increases dividend by ~3% to $0.36

• $TAP - Molson Coors raises dividend by 6.8% to $0.47

• $CB - Chubb raises dividend by 6.6% to $0.97

• $WMS - Advanced Drainage Systems raises dividend by 12.5% to $0.18

• $PAG - Penske Automotive raises quarterly dividend by 3.3% to $1.26/share

• $TOWN - TowneBank raises quarterly dividend by 8% to $0.27/share

• $CW - Curtiss-Wright increases dividend by ~14% to $0.24

• $ADC - Agree Realty raises dividend by 2.4%

• $LSTR - Landstar System raises dividend by 11.1% to $0.40

• $DOLE - Dole raises dividend by 6.3% to $0.085

💰My Dividends This Week

I just earned $390.90 in dividends last week. That was from my 3 oil & gas midstream stocks, including new additions like $MPLX and $HESM.

I’ll be doing stock analysis videos both those soon…

📅 Keep Investing. Stay informed.

– Zach
Founder, Dividend Data

P.S. Questions or suggestions? Reply to this email—I'd love your feedback!

Follow on YouTube | Listen on Spotify | Visit DividendData.com 

Disclaimer: Dividend Dividend (Dividend Data LLC) is not a professional financial service. All materials released from Dividend Data (Dividend Data LLC) are for educational and entertainment purposes. Dividend Data (Dividend Data LLC) is not a replacement for a professional's opinion. Contributors to the Dividend Data (Dividend Data LLC) might have equities mentioned in the newsletter