Wall Street just learned an expensive lesson about betting on Washington.
According to a Wall Street Journal report, UnitedHealth Group lost roughly $60 billion in market value on January 27 after the Centers for Medicare & Medicaid Services proposed 2027 payment rates that would barely budge from current levels.
Analysts had expected increases closer to 5%. Instead, CMS suggested a 0.09% bump. UNH stock plunged 19% in a single session, marking its worst day since April 2025.
For income investors who’ve collected UnitedHealth (UNH) dividends through thick and thin, the question isn’t just about recovering the stock price.
It’s whether that dividend check keeps showing up while the company navigates what could be its roughest period in decades.
UNH is dependent on Medicare for long-term growthGetty Images Heather Diehl ·Getty Images Heather Diehl
Here’s the uncomfortable truth:
UnitedHealth has become heavily dependent on Medicare for revenue growth.
The company’s Medicare revenue is now more than double its private insurance revenue.
That worked great when government rates kept climbing. Now it’s a vulnerability.
CEO Steve Hemsley, who came out of retirement to lead the turnaround after the company fired his predecessor last year, tried to project confidence during Tuesday’s earnings call.
Investors didn’t share his enthusiasm as the stock kept falling.
UnitedHealth now expects 2026 revenue to reach roughly $439 billion, a 2% decline from 2025. That’s the first revenue contraction since 1989, back when hardly anyone had heard of managed care.
That’s worse than the company originally anticipated, driven by fierce competition during the annual enrollment period.
Add in expected losses of 565,000 to 715,000 Medicaid members, plus declines across commercial plans, and you’re looking at total membership dropping by 2.3 million to 2.8 million people.
That’s not all bad news, though. UnitedHealth deliberately walked away from unprofitable business, repricing plans to focus on members it can actually serve sustainably. The strategy prioritizes margin recovery over top-line growth.
“We will need very meaningful benefit reductions and to take a hard look at our geographic and product footprint,” Noel said, according to Reuters.
In other words, seniors should expect fewer extras and potentially higher out-of-pocket costs as insurers scramble to protect margins.
This is where dividend investors need to focus.
UnitedHealth expects to generate at least $18 billion in operating cash flow for 2026.
That works out to roughly 1.1 times net income, down from 1.5 times in 2025 but still healthy enough to cover the dividend.
CFO Wayne DeVeydt said the dividend would “remain well supported by earnings and cash flow” this year.
According to data from Tikr.com, between 2026 and 2030, UNH stock is forecast to expand from:
Revenue from $449 billion to $581.8 billion.
Free cash flow from $19.35 billion to $27.80 billion.
Annual dividend from $8.75 per share to $12.72 per share.
Wall Street expects UnitedHealth’s dividend payout ratio to range around 41% over the next four years, which is not too high. In this period, the dividend yield at cost is expected to increase from 3% to 4.5%.
But here’s the catch investors need to understand: DeVeydt made clear the company won’t return to “historical capital deployment practices” until the second half of 2026. That’s corporate speak for “don’t expect share buybacks anytime soon.”
The dividend itself looks safe based on cash flow projections. But growth in the payout? That could slow to a crawl as the company prioritizes balance sheet repair and navigates a hostile regulatory environment.
For 2026, UnitedHealth projects adjusted earnings per share of greater than $17.75, representing growth of at least 8.6% over 2025’s adjusted EPS of $16.35.
That’s solid, but nowhere near the double-digit earnings growth investors had grown used to.
UnitedHealth faces more than just rate pressure. The WSJ report explained:
The Trump administration has shown little appetite for insurance industry lobbying, despite initial expectations that it would take a friendlier approach.
Federal spending cuts remain a priority, and political hostility toward insurers has only intensified.
Two powerful House committees recently grilled insurance CEOs about care denials, business structures, and profits.
President Trump himself has said he wants to meet with insurers to push for lower pricing.
Meanwhile, CMS administrator Mehmet Oz has positioned himself as a “new sheriff in town” ready to crack down on industry billing practices that have drawn scrutiny.
The final 2027 rates won’t be announced until April, giving the industry time to lobby for improvements. But the early signals suggest the government isn’t in a generous mood.
UnitedHealth’s dividend isn’t in immediate danger. Cash flow remains strong enough to support current payouts, and management has explicitly committed to maintaining the dividend.
But this isn’t a growth story anymore, at least not for the next year or two.
The company needs time to stabilize margins, work through membership declines, and adapt to a tougher regulatory environment.
Dividend growth will likely remain minimal until earnings momentum returns, not until 2027 at the earliest.
For conservative income investors looking for steady, growing dividends, UnitedHealth doesn’t fit that profile right now. The dividend is safe, but it’s unlikely to grow at the historical pace.
For more aggressive investors willing to ride out volatility, the 19% selloff could create value. But you’d need patience to wait for the turnaround to gain traction and comfort with the political and regulatory risks that aren’t going away.
Sometimes the best dividend play is the one you don’t make.
