Market Backdrop
The stock market has navigated a choppy spring, with investors weighing regulatory risk in health care, earnings signals from consumer staples, and a still-cautious stance on growth names. In May 2026, traders are seeking durable cash flow, reliable dividends, and clear paths to free cash flow expansion as inflation cools and interest-rate expectations stabilize. Against that backdrop, two consumer staples and wholesale retail names stand out for their balance sheets and shareholder-friendly tracks records.
Forget UnitedHealth: Stocks To Watch Now
forget unitedhealth: stocks is the refrain you hear from some portfolio managers who want to avoid the current regulatory friction pinching health insurers. The argument is simple: when one pillar of the health-care ecosystem faces uncertain rate proposals and potential legal drag, it makes sense to tilt toward names with predictable, repeatable cash generation and dividend growth. Two names rising to the top of many buy lists are Procter & Gamble (PG) and Costco Wholesale (COST). Both have shown resilience through various market cycles and offer characteristics investors prize in a late-cycle, uncertain environment: cash flow, buybacks, and a disciplined approach to capital allocation.
The Case For Procter & Gamble (PG)
PG operates a broad portfolio of consumer essentials, giving it a reliable demand base even as macro conditions shift. The company has a long track record of returning cash to shareholders through consistent dividends and share repurchases, a feature many savers seek in the current market climate.
The company has a history of raising quarterly dividends, underscoring its commitment to returning capital even in tougher times. In the latest reported quarter, PG delivered a solid core earnings result with revenue around the low-to-mid twenties billions, showing steady price discipline and cost control despite competitive pressures. Free cash flow remains robust, supporting ongoing dividend payments and potential buybacks that can cushion shares during volatility. A diversified product mix and long-standing branding give PG a moat in consumer staples, where demand tends to be more recession-resistant than discretionary categories.
In recent quarters, PG has highlighted a commitment to shareholder value and a resilient business model. The latest quarterly results pointed to core earnings strength and a willingness to invest in cost efficiencies that could help margins expand as input costs moderate. The dividend profile, paired with credible free cash flow, makes PG an appealing anchor in a diversified income-focused portfolio.
The Case For COST (Costco Wholesale)
Costco offers a slightly different flavor of stability: a membership-based wholesale retailer with high retention, favorable unit economics, and a growing emphasis on member savings through exclusive value propositions. COST’s model tends to perform well in inflationary periods, as members perceive tangible value in bulk purchases and member discounts.
Costco generated substantial operating cash flow in the latest quarter, highlighting its ability to convert sales into cash efficiently even as labor and logistics costs fluctuate. Membership-related income rose at a double-digit pace in the period, reflecting confidence in the value proposition among shoppers. The renewal rate sits near the high end of the industry range, underscoring the stickiness of Costco’s membership model. A strong cash position provides a cushion for capex, potential international expansion, and continued buyback programs.
Costco’s quarterly cadence includes notable free cash flow generation and a disciplined approach to capital returns. Its combination of strong membership economics, robust cash conversion, and a global footprint makes it a compelling alternative to more growth-centric plays, particularly for investors prioritizing dividends and balance-sheet resilience.
Dividend increased for the 70th consecutive year, quarterly payout about $1.0885; Q3 FY2026 core earnings per share around $1.59; revenue near $21.24B, up roughly 7% year-over-year; free cash flow approximately $3.03B. Q1 operating cash flow around $4.69B; membership fee income up about 13.6% to $1.35B; renewal rate around 89.7%; cash balance roughly $17.38B.
These data points illustrate a common thread: both PG and COST deliver important cash-generation engines and reliable capital returns, even as the broader health-care space faces regulatory squeezes. The numbers also reflect ongoing investments in efficiency and scale that can translate into steady margins and shareholder rewards over time.
Why These Names Now, Not UnitedHealth
UnitedHealth Group remains a leader in its own space, but the near-term regulatory environment adds a layer of uncertainty that can complicate earnings visibility. Recent market chatter about CMS rate proposals for 2027 and ongoing DOJ investigations have complicated the risk-reward calculus for insurers with Medicare Advantage exposure. A higher cost of capital or slower rate increases could dampen profit margins in what had previously been a highly predictable revenue stream.
In contrast, PG and COST offer intersection points of stability and value that can help diversify risk. Their business models rely less on policy swings and more on consumer and member behavior, which tends to be steadier, even when interest rates and inflation are in flux. That dynamic is particularly attractive for investors seeking defensive exposure within a broader equity sleeve.
Two Risks To Watch
No stock is immune to risk, especially in a shifting macro backdrop. Here are a few to consider with these two names:
While less exposed than health insurers, both PG and COST operate under global compliance regimes. Any sudden changes in tariffs, import rules, or consumer protection standards could impact costs or pricing. Inflation, wage pressures, and logistics bottlenecks could influence cost structures. The ability to manage costs while protecting price points will be a continued test.
Even with these risks, both PG and COST carry a profile that many investors associate with resilience: durable demand, abundant cash flow, and a proven track record of returning capital to shareholders. The key for 2026 is whether they can sustain margin improvement, continue growing free cash flow, and maintain dividend growth in a climate of slow but steady economic expansion.
What It Means For Portfolios
For investors seeking to diversify away from a single-health-insurer-heavy allocation, PG and COST offer complementary earnings drivers to a balanced plan. Their cash generation supports dividends, buybacks, and potential accretive investments that can shield returns during market pullbacks.
- Dividend Quality: Both names have long-standing track records of returning cash, which can anchor yields in a low-vol environment.
- Cash Flow Durability: High operating cash conversion helps resilience in uncertain times and provides optionality for strategic moves.
- Portfolio Balance: Combining a consumer staples giant with a global warehouse retailer adds sectoral diversification beyond healthcare and tech.
As always, investors should align picks with their risk tolerance, time horizon, and income needs. The objective is not just beating the market in a single quarter but building a resilient framework that can weather regulatory headlines and macro surprises alike.
Bottom Line
In a market where UnitedHealth headlines can swing with policy and regulatory chatter, it can pay to look for steadier engines of cash flow that offer practical upside through dividends and buybacks. Procter & Gamble and Costco Wholesale present two such options, with strong balance sheets, predictable cash generation, and compelling capital return profiles. For those aiming to forget unitedhealth: stocks for a moment and rotate into proven, value-oriented franchises, these names deserve a closer look as we move through the second half of 2026.
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