If you're investing in a dividend stock, it's important to track its performance to see if there are any warning signs that might affect its ability to pay its current rate of dividends in the future. It's those early signs that can save you from a huge disappointment later on.
One stock investors have been worried about these days is UnitedHealth Group (UNH 2.78%). While it's a top health insurer in the country, rising medical costs have been weighing on its financials, and the stock price has been declining. However, with a dividend yield of 3%, it may be an enticing option for income-seeking investors, especially when you consider that the S&P 500's average yield is just 1.1%.
But with UnitedHealth's recent earnings numbers not looking all that strong of late, the big question is whether that dividend is really safe. Let's take a closer look.
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UnitedHealth's earnings from operations declined by 41% in 2025
Last week, UnitedHealth posted its year-end earnings numbers, and they weren't great. While revenue of $447.6 billion rose by 12% year over year, its earnings from operations were down by 41%, totaling just under $19 billion.
There was a lot of noise on its financials, however, as the company incurred expenses related to restructuring efforts, workforce reductions, and a previous cyberattack. The bigger concern is that the healthcare company has been battling rising medical costs, and that has made investors think twice about owning the stock.
Looking ahead, the company's guidance calls for earnings from operations to improve to $24 billion for the full year. It also expects an operating cash flow of at least $18 billion -- down from the $19.7 billion it generated this past year.
NYSE: UNH
Key Data Points
Is UnitedHealth's dividend safe?
Over the course of a full year, UnitedHealth is paying about $8 billion in dividends. While the company expects its cash flow from operations to slow to $18 billion, that still looks sufficient to cover its estimated capital expenditures of $3.8 billion, share repurchases of $2.5 billion, and to still pay dividends. There aren't any glaring signs to suggest that the dividend is in trouble or that a cut may be coming anytime soon.
UnitedHealth could make for an intriguing dividend stock to own, given its larger-than-usual yield. But there are risks with the stock, as it could go lower in the future. The share price is down more than 40% in just three years. Persistently high costs and concerns about its future growth are just a couple of reasons why investors have been moving away from the stock of late.
While the dividend looks safe, UnitedHealth is a stock that may be suitable to put on your watch list, but I wouldn't rush out to buy it today.
