Is UnitedHealth Group Stock a Millionaire Maker?
Is UnitedHealth Group Stock a Millionaire Maker?
Making a million dollars from a single stock sounds like it could be an unrealistic goal. But if you pick a good growth stock, which also pays a dividend, and hold on to it for the long haul, it's entirely possible to envision.
A stock that has been an exceptional investment over the past decade is UnitedHealth Group (NYSE: UNH). In 10 years, the healthcare stock has generated total returns (including dividends) of more than 630%. The stock has beaten the market and provided investors with some fantastic returns along the way.
But is this stock good enough to potentially be a millionaire-making investment in the long run?
Why UnitedHealth's business looks promising
Healthcare spending in the U.S. represents more than 17% of the country's total gross domestic product. In 2022, there was a total of $4.5 trillion spent on healthcare, which averages out to $13,493 per person, according to data from the National Health Expenditure Accounts, a part of the CDC. Investing in a top healthcare company can be a good way for investors to generate strong, consistent returns as spending in this segment is only likely to rise in the future.
UnitedHealth stands out as a top healthcare stock for multiple reasons. It's a leading name in the industry and it's known for health insurance. It has also been expanding into adjacent businesses in recent years to make its operations even more diverse. This includes getting into home healthcare and analytics, to provide more value for the partners it works with and patients.
By getting larger in its scope while also benefiting from an increase in the number of seniors who will require ongoing care in the future, UnitedHealth has positive-looking prospects in the long run. And this is a business that knows how to grow. Since 2011, UnitedHealth has more than tripled its revenue from just over $101 billion to nearly $372 billion in 2023. During that time, its bottom line has also quadrupled from just over $5 billion to $22 billion.
Investors should temper their expectations
UnitedHealth isn't a small-cap stock that could quickly double or triple in value. Its market capitalization of $450 billion makes it one of the most valuable healthcare companies in the world. To earn a big return from the stock, you'll need to be patient.
Based on its 10-year returns, the stock has averaged an annual gain of more than 22% when including its dividend. That's more than double the S&P 500's long-run average of 10%. If you're talking about a period of 20-plus years, then the return will likely be lower since there will inevitably be bad years mixed in with some good ones in the very long run.
Here's how much you would need to invest in the stock to get to $1 million, based on more modest market-beating returns:
| Investment Needed to Get to $1 Million | |||
|---|---|---|---|
| Years | 12% | 14% | 16% |
| 15 | $182,696.3 | $140,096.5 | $107,927.0 |
| 20 | $103,666.8 | $72,761.7 | $51,385.5 |
| 25 | $58,823.3 | $37,790.2 | $24,465.3 |
| 30 | $33,377.9 | $19,627.0 | $11,648.2 |
Calculations by author.
For most investors, UnitedHealth probably won't be a millionaire-making investment because of the size of an investment it would require.
Should you invest in UnitedHealth stock anyway?
UnitedHealth has a robust business with a lot of potential on the horizon. It could generate some great returns for you in the long run but given its already high market value, it might not be a stock that can make you a millionaire -- unless you're comfortable investing at least $20,000 or more into the healthcare company.
But even if it can't make you a millionaire, it can still make an excellent stock to buy and hold given its strong financials, its modest 1.7%-yielding dividend, and its constant pursuit of growth. In the end, you're likely to still end up with a great return by holding shares of UnitedHealth.
Should you invest $1,000 in UnitedHealth Group right now?
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.