Market Crash: This Dividend Stock Becomes a No-Brainer Buy at a Discount

I feel like it's time for a confession, so here it is: Not every stock that I love is a winner right now. But I tend to fall hard for companies that I know are solid and will rebound when the time is right.

Case in point: During the COVID-19 pandemic, travel restrictions meant nobody was going anywhere, and that took a big bite out of the airline and cruise industry. I loaded up on Delta Air Lines and Royal Caribbean Cruises when they were at their bottom and turned them into big profits just a year later.

I'm seeing a similar opportunity with UnitedHealth Group (NYSE: UNH), which was hit hard last year after disappointing earnings and it failed to maintain a solid profit margin. But the company is rightsizing for the future -- and just received a major catalyst that makes me think UnitedHealth Group will deliver strong returns over the next year or two.

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What's happening with UnitedHealth Group?

UnitedHealth Group stock is down 41% in the last year, and with good reason. The company started showing red flags in early 2025, when it missed analysts' earnings estimates for the first time since the 2008-09 financial crisis. The company was also forced to lower its full-year guidance after encountering higher-than-anticipated costs from its members.

The Medicare Advantage program, which is a popular private alternative to the federal Medicare program, was one of the biggest problems. But the company also got hit by a perfect storm of misfortune, including a Justice Department investigation over its Medicare billing practices, the resignation of its CEO, and an executive's high-profile murder on a New York City street.

UnitedHealth Group announced plans to scale back its Medicare Advantage plans in 16 states as it attempted to rightsize. But this week it got the best news it's received in months: The Trump administration approved a better-than-expected payment rate for Medicare Advantage plans, which will make them more profitable for health insurance stocks like UnitedHealth Group.

The government will increase payments by 2.48% in 2027 -- a major improvement after it proposed a 0.09% increase earlier this year. The rate increase does two things: It encourages UnitedHealth Group and other insurers to expand their Medicare Advantage programs, and it increases the profit margin as the increased rate will help offset rising medical costs.

The outlook for UnitedHealth Group

UnitedHealth Group has always been an ideal dividend stock. Currently, the yield is 2.9%. But the stock's recent decline is due to the earnings outlook, not the dividend. When management issued its 2026 outlook in January, it projected revenue of at least $439 billion versus $337.6 billion in 2025. Earnings were projected to be $24 billion versus $19 billion in 2025.

Now that the Trump administration is raising Medicare Advantage payments, many eyes will be on UnitedHealth Group's next earnings report on April 21. If management talks about reentering some markets where it had been pulling back from Medicare Advantage, I'll take it as a strong sign that UnitedHealth Group's woes are firmly in the rearview mirror.

Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool recommends Delta Air Lines and UnitedHealth Group. The Motley Fool has a disclosure policy.