UnitedHealth Group will raise its quarterly dividend by another 32 percent as the price of its stock hits all-time highs.
The payout is being made in the face of funding cuts to a key portion of the health insurer's business starting next year.
The Minnetonka, Minn., company's new payout of 28 cents per share represents an increase of nearly 7 cents from the insurer's current dividend of 21.25 cents. The largest U.S. health insurer said Wednesday the dividend will be paid on June 21 to all shareholders of record as of the close of business June 14.
The company said its new dividend reflects the company's growth and consistent financial performance.
Health insurance is UnitedHealth's largest business, but it also operates segments that sell information technology services and pharmacy benefits management. UnitedHealth also is the largest provider of Medicare Advantage plans, which are privately run versions of the government's Medicare program for the elderly and disabled people.
The insurer also is expanding internationally by spending about $4.9 billion to buy Amil Participacoes SA, a Brazilian health benefits and care provider.
The company's stock slipped in April after it warned that looming funding cuts for Medicare Advantage plans will force it to reconsider its earnings growth expectations for next year. The company also said widespread government spending cuts that started earlier this year and have already hit Medicare will make it hard for the insurer to reach the top end of its forecast for 2013 earnings of $5.25 to $5.50 per share.
Despite that concern, investors have clamored for company shares due in part to its dividend, the diversity of its business and its track record. The company usually trumps Wall Street expectations each quarter.
UnitedHealth Group Inc. initiated quarterly payments in 2010 at 12.5 cents per share, becoming the first major health insurer to give shareholders more than a token dividend. A year ago, it raised that dividend from 16.25 cents to 21.25 cents per share.
UnitedHealth also said Wednesday that its board renewed a share repurchase program, authorizing the repurchase of 110 million shares over time. Share repurchases can boost a stock's value by reducing the number of shares on the market.
UnitedHealth had about 1 billion shares outstanding as of May 31.
Company shares hit an all-time high price of $64.90 on May 30, according to FactSet, and the stock has climbed 15 percent so far this year.
Shares rose almost 2 percent in premarket trading after closing at $62.36 Tuesday.