These three healthcare stocks will benefit if Trump wins in 2024

The probability of Donald Trump returning to the White House currently sits at about 60%, as per Andrew Lilley – the chief interest rate strategist at Barrenjoey.

And if Joe Biden’s Republican rival does indeed win the 2024 U.S. elections, the following three health insurance stocks will likely benefit.

Why may health insurance stocks benefit from Trump’s victory?

The chances of Donald Trump securing a second term have increased about 5.0% since his debate with President Joe Biden on Thursday (June 27^th).

If he does indeed return to office in November, Medicare Advantage stocks will rally, said Ben Hendrix – an RBC Capital Markets analyst in his recent note to clients.

A second Trump term would ease regulatory and reimbursement headwinds weighing on the managed care stocks, particularly the Medicare Advantage leaders.

Note that three of the top, most well-positioned Medicare Advantage stocks include CVS Health, Humana, and UnitedHealth. All three of them were seen gaining after the Donald Trump – Joe Biden 90-minute clash on CNN last week.

UnitedHealth, Humana, and CVS are down for the year

Healthcare stocks like UNH, CVS, and HUM are attractive in terms of valuation as well at writing.

UnitedHealth is down more than 5.0% while CVS and Humana are down about 25% and 20%, respectively versus the start of 2024.

The aforementioned health insurance stocks have been under pressure this year due to higher medical costs among seniors and regulatory chances that affected reimbursement for Medicare Advantage.

With Donal Trump in the office, the regulatory and reimbursements headwinds are broadly expected to subside for health insurance stocks which may help shares of UnitedHealth, Humana, and CVS gain in late 2024.

CVS, UNH, and HUM pay a dividend as well

Andrew Lilly of Barrenjoey expects interest rates to climb if Donald Trump wins the 2024 U.S. Presidential Elections.

There’s a big debate on whether that [Trump winning] would be good news or bad news for equity markets, but for bond markets, the consensus is clear. If Trump were to win, interest rates would likely increase.

That’s significant for the likes of UnitedHealth, CVS, and Humana as they typically hold sizable investment portfolios. Higher interest rates can boost their investment income, particularly one from fixed-income securities.

Better investment returns can improve their overall profitability as well. Lastly, higher interest rates may also help health insurance stocks benefit in terms of pricing power.

Another reason to invest in CVS, Humana, and UnitedHealth stocks is that all three of them currently pay a dividend. HUM dividend yield sits at 0.95% at writing while UNH and CVS are at 1.65% and a lucrative 4.50%, respectively.

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