1 Growth Stock Hiking Dividends Again

A growth stock that pays a dividend may be the holy grail of investing because you get both the upswing in share price and the buffer of a steady payout when times get rocky.

Finding that unicorn is easier said than done because a lot of companies fall into one category or the other but not both. A growing stock typically wants to reinvest any spare cash flows to fuel further growth versus paying out profits to shareholders.

Equally, a dividend stock usually has its best days behind it, at least from a growth perspective. Often it’s a stock that has a wide economic moat and produces enormous cash flows thanks to a brand advantage but is unlikely to rise fast anytime soon.

So what company has been growing and paying a dividend? We might just have stumbled upon an intriguing one.

Key Points

• A company that reports higher revenue each quarter and pays a handsome dividend is rare but one healthcare firm fits the bill.
• For 10 years straight, United Healthcare has reported higher quarterly revenue on a year-over-year basis without interruption.
• Add to that the streak of 14 years of increasing its dividend and you end up with a compelling growth plus dividend story.

Healthcare Firm Growing & Rewarding Shareholders

When you think of healthcare companies, United Healthcare probably doesn’t scream growth stock but it may come as a surprise just how predictable its revenue hikes have been.

Three years ago, UNH reported quarterly revenues of $70.1 billion. Since then, without interruption, each and every quarter, management has reported higher year-over-year revenues. Today they sit at $94.4 billion.

For the full year, revenues have come in at $371 billion over the past twelve months. It’s no surprise then that the market capitalization is $473 billion and the share price is up 2x in the past 5 years alone.

To find a company that consistently reports higher quarterly revenues is difficult so we did a deep dive and went back a full ten years and discovered the same trend as we found over 3 years. Every single quarter without fail, revenues were higher on a year-over-year basis. That’s quite a streak and so it’s no surprise the company is producing enormous cash flows that have translated into a healthy dividend.

Solid Dividend + Growth

United Healthcare’s enormous revenues have translated to equally impressive cash flows that came in at $22.8 billion last quarter. That allows the Board of Directors to pay out a solid dividend of $7.52 per share, which translates to a yield of 1.47%. Better yet, the company has increased its yield for 14 years straight. And with its mountain of cash flows, the payout ratio of just 30% suggests the payout is in no jeopardy anytime soon.

For investors now, it’s hard to bet against a continued upward trajectory for United Healthcare. Admittedly, the company’s P/E ratio now at 21x is a little lofty and 8 analysts have revised their estimates lower for the upcoming period so short-term some turbulence may be on the horizon but long-term the future is bright.