UnitedHealth Group (UNH 0.30%) has been a top healthcare stock to own for years. Today, it's among the largest healthcare companies in the world, worth $475 billion. Although it's a health insurer, the company has been a growth machine over the years, and it continues to get bigger via acquisitions. Below, I'll look at what a $25,000 investment into the healthcare giant 10 years ago would be worth right now and whether the stock is a good buy today.
Where was the stock trading 10 years ago?
On Aug. 1, 2013, shares of UnitedHealth closed at a price of $73.16. Investing $25,000 into the business back then would have enabled you to buy roughly 342 shares of the business.
Shares of UnitedHealth are now trading at around $503 as of Wednesday's close, which means the value of those shares would now be worth more than $172,000 -- nearly seven times the original investment. By comparison, if you invested $25,000 into the S&P 500, that investment would be worth around $64,500. And this doesn't yet factor in the dividend income you would have earned from UnitedHealth Group. When including dividends, then your investment would be over $200,000 versus $78,000 with the S&P 500.
UnitedHealth is both a top growth stock and a solid dividend investment
All in all, UnitedHealth has made for a fantastic investment over the years. A big reason for that is the business has continually generated strong growth on both its top and bottom lines. What's most impressive is that profits have grown at a faster rate than revenue.
UNH Revenue (TTM) data by YCharts.
But an underrated aspect of UnitedHealth is its dividend. Its 1.4% yield appears modest and is comparable to that of the S&P 500 average. However, UnitedHealth has aggressively raised its payouts over the years as well, and that means investors get a huge incentive from buying and holding the stock as their dividend income rises significantly over time.
UNH Dividend data by YCharts.
UnitedHealth's solid financials, along with a fast-rising dividend, has made this an incredible investment to own over the years for both dividend and growth-oriented investors.
Is UnitedHealth still a good buy today?
UnitedHealth remains an excellent investment to buy and hold. Demand for healthcare is only going up as Baby Boomers retire and seniors account for a larger chunk of the population. UnitedHealth has also diversified, pursuing other opportunities that can help lead to more growth down the road. The company closed on its acquisition of home health company LHC Group earlier this year. And in 2022, it acquired data analytics company Change Healthcare, which can help streamline administrative processes.
In the future, there should be many more growth opportunities ahead for UnitedHealth as the business generates impressive free cash flow; over the past four years, its lowest tally was north of $16 billion which it generated in 2019. While its total dividend payout is around $6 billion per year, there's plenty of cash left over for UnitedHealth to pursue more acquisitions and growth opportunities.
Today, UnitedHealth stock trades at just 23 times its trailing earnings, which is noticeably less than the healthcare average of 27. This healthcare stock is a bargain buy for the potential returns that it may generate for you, both in the way of capital appreciation and through dividend income. UnitedHealth is a buy-and-forget type of investment that you can safely put in your portfolio for years.
