1 Dividend Stock Down 32% You'll Regret Not Buying on the Dip

Key Points

• UnitedHealth Group bounced back in August following a disastrous start to the year.

• The company outlined a plan to increase revenue and trim costs for 2026 and 2027.

• The dividend is up 34% in the last three years.

• 10 stocks we like better than UnitedHealth Group ›

UnitedHealth Group (NYSE: UNH) stock has been one of the most interesting on Wall Street in the last few weeks. Following a brutal start to the year, the healthcare provider was the No. 1 performing stock in the entire S&P 500 in August 2025, rising more than 24%. It was an extraordinary performance in an index that contains several high-flying technology stocks that have been absolutely dominating the market of late.

Despite that great August performance, UnitedHealth Group stock still trades down 32% so far this year, badly trailing the general market and being a huge disappointment to investors. Most interestingly, UnitedHealth Group remains a powerful dividend stock, paying a solid yield of 2.5%. The payout is also increasing year to year, up 34% over the last three years.

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So, here you have a case of a beaten-down dividend stock that is finally showing signs of life -- but is still far below its recent levels. That suggests there is still a lot of room to run with this stock. Put it all together, and it creates a classic case of a great dividend stock that you'd regret not buying on the dip.

Image source: Getty Images.

UnitedHealth Group's fall

A lot went wrong for UnitedHealth Group in 2025. It took on new Medicare Advantage patients, but those patients visited a lot more doctors than the company anticipated, and the added costs cut into UnitedHealth Group's profits. As a result, it failed to meet expectations for its first-quarter earnings (the company's first miss since the 2008 financial crisis) and it lowered its full-year outlook.

Then in May, CEO Andrew Witty resigned abruptly, and the company pulled its annual guidance entirely, citing increasing medical costs. Even though Chairman Stephen Hemley returned as CEO (he had stepped down in 2017), UnitedHealth Group shares plummeted further.

On top of that, the Department of Justice began a criminal probe into the company for alleged Medicare fraud and billing practices within Medicare Advantage plans that UnitedHealth Group manages. The government was also looking at UnitedHealth Group's acquisition of Amedisys as part of an antitrust review.

An August to remember

But then a lot of things started going right. First, the company made some public steps to right the ship. During the second-quarter earnings call on Aug. 6, Hensley promised "fundamental reorientation" of the business that included premium increases for 2026 and 2027, narrowing networks, and using artificial intelligence (AI) to help control costs.

Then Berkshire Hathaway, led by legendary CEO Warren Buffett, announced that the conglomerate bought 5 million shares of UnitedHealth Group stock. Investors watch Berkshire's portfolio closely, and the investment was seen as a sign of confidence -- although I see it as a classic Berkshire/Buffett play of investing in a great company at a low price. Berkshire's stake was worth $1.7 billion at the time of this writing. The stock's August gains were all but assured.

And the momentum is still going strong. In a regulatory filing, UnitedHealth Group disclosed that 78% of its Medicare Advantage targets will be in plans next year with quality ratings of at least four stars -- a target that former CEO Witty had set, and that investors had feared the company would not hit.

The case for UnitedHealth Group

While UnitedHealth Group is back on the rise, the first seven months of the year left the stock badly depressed. But as Berkshire Hathaway and Buffett can attest, the stock is currently at attractive levels, with its price-to-earnings ratio far below its five-year median.

UNH PE Ratio data by YCharts

In addition, UnitedHealth Group's dividend is substantial -- and growing. The company on Aug. 13 reaffirmed that despite the stock drop, UnitedHealth would issue its dividend of $2.21 per share. The company's dividend is growing quickly, up 11 cents per share last year and 34% in the last three years, while the current dividend yield is 2.5%.

Data by YCharts.

The bottom line

Berkshire Hathaway and Buffett aren't perfect, but they have amazing track records and a sense for picking up quality wounded stocks at the right time. UnitedHealth Group has a solid plan in place to increase profits and reduce expenses, so I expect it to start meeting -- or exceeding -- expectations again in 2026.

In the meantime, I think this is an ideal dividend stock to pick up on the dip.

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Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.