This Company Looks Like A Good Stock

If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. UnitedHealth Group paid out a comfortable 28% of its profit last year. A useful secondary check can be to evaluate whether UnitedHealth Group generated enough free cash flow to afford its dividend. It distributed 35% of its free cash flow as dividends, a comfortable payout level for most companies. It’s encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.

UnitedHealth Group Incorporated (NYSE:UNH) stock is about to trade ex-dividend in 3 days time. Investors can purchase shares before the 13th of September in order to be eligible for this dividend, which will be paid on the 24th of September. UnitedHealth Group’s next dividend payment will be US$1.08 per share, on the back of last year when the company paid a total of US$4.32 to shareholders. Based on the last year’s worth of payments, UnitedHealth Group stock has a trailing yield of around 1.9% on the current share price of $229. If you buy this business for its dividend, you should have an idea of whether UnitedHealth Group’s dividend is reliable and sustainable. That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Source: Simply Wall St.

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