MRK vs UNH: Dividend Comparison
Dividend data as of
Merck & Co., Inc. (MRK) and Unitedhealth Group Inc (UNH) are both in the Health Care sector, making them natural rivals for dividend investors. UNH edges ahead on yield at 3.20% versus MRK's 2.77%. For dividend growth, UNH leads with a 5-year CAGR of 11.7% versus MRK's 5.9%. Both stocks carry a "Safe" dividend safety rating. Both are classified as Dividend Contenders.
Verdict
Yield Analysis
UNH yields 0.43% more than MRK. In dollar terms, MRK pays $3.24/share vs UNH's $8.73/share annually.
Dividend Growth
MRK: Dividend growth is slowing — the 3-year CAGR of 5.3% trails the 5-year rate of 5.9% and the 10-year rate of 7.1%.
UNH: Dividend growth is slowing — the 3-year CAGR of 9.4% trails the 5-year rate of 11.7% and the 10-year rate of 15.6%.
Dividend Safety
MRK: The payout ratio of 45% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.2x.
UNH: The payout ratio of 45% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.2x.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in MRK vs UNH today?
At $121.49 per share, $10,000 buys about 82.3 shares of Merck & Co., Inc. (MRK). Each share pays $3.24 per year in dividends, so the position starts out generating roughly $267 per year — about $22 a month.
At $291.12 per share, $10,000 buys about 34.4 shares of Unitedhealth Group Inc (UNH). Each share pays $8.73 per year in dividends, so the position starts out generating roughly $300 per year — about $25 a month.
UNH is the larger income stream from day one: $33 per year more on the same $10,000 invested.
What could $10,000 of MRK or UNH income look like in 10 years?
Merck & Co., Inc. (MRK) has raised its dividend about 5.9% a year over the past five years. If that pace held, the $277 per year that $10,000 generates today at the current 2.77% yield would reach $490 per year by 2036 — a 4.9% yield on the original cost.
Unitedhealth Group Inc (UNH) has raised its dividend about 11.7% a year over the past five years. If that pace held, the $320 per year that $10,000 generates today at the current 3.20% yield would reach $970 per year by 2036 — a 9.7% yield on the original cost.
On those trailing rates, UNH pays more in 2036: $970 versus $490 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would MRK's dividend growth overtake UNH's higher yield?
It doesn't, on the trailing numbers. Unitedhealth Group Inc (UNH) yields more today (3.20% vs 2.77%) and has also grown its dividend at least as fast (11.7% vs 5.9% a year over five years). Unless MRK accelerates its raises or UNH stumbles, MRK never closes the income gap — UNH wins on both current income and growth.
Can MRK and UNH afford their dividends?
Merck & Co., Inc. (MRK) earns $7.28 per share against $3.24 paid out in dividends — 2.2x coverage (a 45% payout ratio).
Unitedhealth Group Inc (UNH) earns $19.19 per share against $8.73 paid out in dividends — 2.2x coverage (a 45% payout ratio).
Coverage is similar for both, so neither dividend looks meaningfully more stretched than the other on current earnings.
Which fits an early-retirement income portfolio better, MRK or UNH?
For income you need right now, Unitedhealth Group Inc (UNH) leads: $100,000 invested today pays about $266 a month at the current 3.20% yield, versus $230 a month from Merck & Co., Inc. (MRK) at 2.77%.
UNH also leads on dividend growth (11.7% vs 5.9% a year over five years), so the trailing numbers favor it on both fronts.
On consistency: MRK has raised its dividend 15 consecutive years; UNH has raised its dividend 16 consecutive years.
Many income investors simply hold both — the mix pairs current yield with growth and spreads single-name risk. Whichever way you lean, dividends are never guaranteed; recheck the payout each quarter rather than setting and forgetting.
$10,000 with DRIP: projected annual income
If each holding keeps raising its dividend at its real 5-year rate and every payment is reinvested, a $10,000 position pays $643/yr in MRK vs $1,328/yr in UNH by year 10.
Assumes dividends are reinvested at the current yield and grow at each holding's trailing 5-year dividend CAGR. A projection, not a prediction — no price appreciation modeled.
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