The healthcare sector has seen a significant rally in June, outperforming the broader market. In response, Raymond James has added two dividend-paying stocks, UnitedHealth Group and Janus Henderson, to its list of top picks. Both companies are expected to benefit from favorable industry trends and offer attractive shareholder returns.
The typically quiet healthcare sector experienced a significant upturn in June, prompting Raymond James to bolster its list of top stock picks with two dividend-paying companies.
While the tech sector faced headwinds, sliding 3% as investors shied away from software and major tech stocks, the healthcare sector surged over 6%. Strategists note that healthcare stocks have generally been trading at more attractive valuations compared to their tech counterparts. UBS strategist Gerry Fowler highlighted in a mid-June report that healthcare's global appeal is growing, with U.S. healthcare stocks now presenting growth themes as compelling as AI investments, especially given their cheaper starting point and positive earnings revisions.
Raymond James updated its healthcare recommendations, spotlighting two companies that also offer attractive dividend yields:
UnitedHealth Group (UNH)
The health insurance giant has had a strong year, with its stock up 28%. UnitedHealth Group replaces Oscar Health on Raymond James' recommended list. The investment bank cited expectations of near-term upside following UnitedHealth's July 16 earnings report, driven by moderating medical costs and improving margins in its insurance and Optum Health divisions. In the first quarter, UnitedHealth reported adjusted earnings per share of $7.23 on revenue of $111.72 billion, surpassing analyst expectations. The company also raised its full-year adjusted earnings forecast. Raymond James anticipates continued outperformance, supported by moderating inpatient medical costs and pharmacy spend, and expects upward estimate revisions to bolster the stock. UnitedHealth recently increased its quarterly dividend by 5% to $2.32 per share, offering a current dividend yield of 2.2%. Despite a consensus price target suggesting a slight potential decline over the next year, the majority of analysts rate UNH as a buy or strong buy.
Janus Henderson (JAN)
Raymond James also recommended Janus Henderson, a senior housing provider. The firm is constructive on Janus Henderson's focused seniors housing platform, citing favorable sector fundamentals such as recovering occupancy, limited new supply, and supportive demographic trends. The company is well-positioned to capitalize on growth opportunities through margin improvements and strategic acquisitions in a fragmented market. Janus Henderson, a recent entrant to public markets after its March IPO, has seen its stock rise 45% from its initial offering price. The stock offers a current dividend yield of 1.96%. Wall Street analysts are largely optimistic, with 10 out of 11 rating it a buy or strong buy, although the consensus price target indicates limited immediate upside.
