Deal making in the health care sector is drawing a lot of attention, with more than $240 billion worth of mergers and acquisitions announced so far this year. According to PwC, a global consultancy, U.S. deal volume in the health care sector was up 19% in the first quarter, while deal values were up 92% year-over-year.

The Affordable Care Act has been a major driver of this wave of consolidation. While both health care use and costs are on the rise, overall health care spending growth here in the U.S. is slowing. Health care spending was growing at an annualized 10.5% in 2007, but grew by just 6.5% last year and is widely expected to fall further. That’s largely thanks to tighter reimbursement caps on care through government programs such as Medicare and Medicaid, and required spending levels for private insurers.

Those cost control measures have essentially put a speed bump in front of revenue and earnings growth for most health care companies, making it more important that they wring out the most profit possible. The main motivator behind the proposed ties ups of Aetna and UnitedHealth or Cigna and Anthem is the ability take advantage of economies of scale. By merging their operations, the major insurers can lower costs by eliminating redundant operations and employees, even as they can squeeze better deals out of suppliers and providers by virtue of their size.

Aside from insurers and health maintenance organizations, we’re also seeing a lot of deals being made on the pharmaceutical side of the business.

Novartis (NYSE: NVS) and GlaxoSmithKline (NYSE: GSK), both Conservative Portfolio holdings, recently completed a largely unprecedented asset swap. Glaxo gets Novartis’s vaccine business and an interest in a new joint consumer business, while Novartis gets Glaxo’s cancer franchise. As a result, Novartis will be a leader in the oncology field with 22 cancer medicines and the option to pick up cancer drugs under development at Glaxo. Glaxo will also become a leader in vaccines, which are steady growers in terms of sales, and pick up an extra $6 billion which it plans to give back to stockholders by way of share buybacks.

Picking up more pricing power and improving efficiencies and margins are the unifying themes behind all of these deals, which is raising concerns that they might ultimately be bad for health care consumers. All of this wheeling and dealing is actually good news for investors though, particularly if you’re focused on income.

For instance, Novartis currently pays out about 66% of its earnings in the form of dividends for a current yield of 2.7%. The cancer franchise it is picking up had sales of about $1.8 billion last year while Novartis had a net margin of about 19%. Assuming both sales and margins remain fairly constant, that means Novartis could add about $340 million in earnings with the pickup of those cancer drugs, which would leaving about $200 million to possibly be added to the dividend.

Even more cash could be freed up for payouts if Novartis is able to squeeze greater efficiencies out of those operations. And Glaxo shareholders aren’t going to be left out in the cold either, getting an almost immediate bump thanks to share buybacks with plenty of room for dividend growth from the growing vaccine business.

Considering that we’ve been getting a lot of price appreciation lately as the health care sector has been getting hot from all the deal making, plus all the cash being freed up for dividends, this recent wave of mergers and acquisitions activity is a great deal for investors.