Investing trends often oscillate between growth and value stocks, each offering distinct advantages for long-term investors. Value stocks have garnered attention for their potential to provide stable long-term growth, frequently backed by well-established companies that lead their sectors.
For those on the lookout for promising value stocks expected to shine in the coming decade, here are two significant players to consider for your investment portfolio.
1. UnitedHealth Group (NYSE: UNH)
As a prominent entity within the healthcare sector, UnitedHealth Group stands out with its expansive insurance services and innovative provider solutions. The company operates through its UnitedHealthcare segment, offering a plethora of insurance products catering to both individuals and businesses, which includes short-term, dental, Medicare, and Medicaid plans.
Additionally, UnitedHealth’s Optum segment delivers a variety of healthcare solutions, encompassing pharmacy care, data analytics, and tech-driven services. This division also boasts an extensive array of care delivery options, from primary to specialty care and mobile services.
In the first half of 2024, UnitedHealth Group achieved total revenues of $198.7 billion, reflecting a 7% year-over-year increase. Even though net earnings reached $3.2 billion during this timeframe, a temporary decline was observed due to significant compensations to healthcare providers following a recent cybersecurity incident and heightened Medicare usage rates.
Nevertheless, these short-term factors are unlikely to impact the company’s long-term growth trajectory. Approximately $155 billion of UnitedHealth’s first-half revenue stemmed from insurance premiums, underscoring its financial robustness.
In the last five years, UnitedHealth has experienced a remarkable 53% increase in annual revenue and a 62% uptick in profits. With annual operating cash flows growing an impressive 57%, this company is also known for its commitment to shareholders, boasting a forward annual dividend rate of $8.40 per share and a yield hovering around 1.5%. This dividend has surged by nearly 94% over the past five years, with the company consistently increasing its payouts for 15 consecutive years. Such a steadfast growth pattern and a dependable dividend are traits to look for in a robust value stock poised for future gains.
2. Costco Wholesale (NASDAQ: COST)
Despite significant volatility affecting many brick-and-mortar retailers, Costco continues to demonstrate resilience and growth. Renowned for its mammoth warehouse stores, Costco offers a diverse mixture of products ranging from groceries and electronics to furniture and household items. The company’s business model is bolstered by its membership system, which not only generates significant revenue but also enhances customer loyalty.
The bulk of Costco’s revenue is derived from merchandise sales, but a substantial portion of its profits comes from membership fees. This strategy ensures sustained consumer traffic in its stores and online platforms, mainly due to competitive pricing on both brand-name and private-label products.
Costco’s approach minimizes inventory costs while managing customer access through a membership requirement. Typically, each warehouse holds fewer than 4,000 active stock-keeping units, optimizing efficiency. The company has recently reported outstanding fiscal results for 2024, with total revenue touching $254.5 billion — a 5% improvement year-over-year, alongside profits soaring 17% to $7.4 billion. Moreover, membership count has grown, resulting in a more extensive customer base and increased revenue streams.
Costco has also established a record of dividend payments, having raised its dividend yearly for the past 19 years, while currently standing at $4.64 per share, although its yield remains on the lower side at less than 1%. The company has a history of issuing special dividends, like the recent $15 per share distribution made in January 2024. This combination of dividend growth and capital appreciation has led to a remarkable total return of over 220% for investors in the last five years.
For those seeking compelling investment opportunities, both UnitedHealth Group and Costco Wholesale present strong cases as top-performing value stocks. Their robust business models, consistent revenue growth, and unwavering commitment to dividends make them worthy contenders for anyone’s investment strategy as we look ahead to 2030 and beyond. As such, keeping an eye on these companies could prove beneficial for investors looking to enrich their portfolios with resilient, long-term investments.