Up to date on February tenth, 2025 by Felix Martinez
Buyers on the lookout for high-quality dividend progress shares ought to focus, partially, on corporations that preserve lengthy histories of dividend will increase.
Regular dividend raises from yr to yr, whatever the financial local weather, is an indication of an organization with sturdy aggressive benefits and long-term progress potential.
With that in thoughts, yearly, we evaluate every of the Dividend Aristocrats, a bunch of 69 corporations within the S&P 500 Index, with 25+ consecutive years of dividend will increase.
You’ll be able to obtain your copy of the Dividend Aristocrats record, together with necessary metrics like dividend yields and price-to-earnings ratios, by clicking on the hyperlink beneath:
Disclaimer: Certain Dividend is just not affiliated with S&P World in any approach. S&P World owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet is predicated on Certain Dividend’s personal evaluate, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s primarily based. Not one of the info on this article or spreadsheet is official knowledge from S&P World. Seek the advice of S&P World for official info.
The subsequent Dividend Aristocrat within the sequence is healthcare big Medtronic (MDT).
Medtronic has a powerful historical past of dividend progress. The corporate has elevated its dividend for 47 years in a row. With an roughly 3.1% yield, Medtronic is just not precisely a high-yield inventory. Nonetheless, the inventory’s yield remains to be greater than the typical yield of the S&P 500.
And, Medtronic sometimes raises its dividend at a excessive price annually, due to its robust earnings and management place inside the medical units {industry}.
These qualities make Medtronic a horny dividend progress inventory for long-term traders.
Enterprise Overview
Medtronic was based in 1949 as a medical tools restore store by Earl Bakken and his brother-in-law, Palmer Hermundslie. Right this moment, Medtronic is among the largest healthcare corporations on the planet.
Medtronic PLC is the biggest producer of biomedical units and implantable applied sciences on the planet. Medtronic at the moment has 4 working segments: Cardiovascular, Neuroscience, Medical Surgical, and Diabetes.
In mid-February, Medtronic reported monetary outcomes for the second quarter of fiscal yr 2025. The corporate reported robust Q2 FY25 outcomes, surpassing expectations and elevating its full-year steerage. Income elevated 5.3% to $8.4 billion, with GAAP EPS up 46% to $0.99 and non-GAAP EPS at $1.26. Progress was pushed by innovation throughout key segments, together with transcatheter aortic valve substitute (TAVR), pulsed subject ablation (PFA), leadless pacemakers, diabetes, backbone, and neuromodulation.
CEO Geoff Martha emphasised the corporate’s robust execution and dedication to advancing medical expertise. With a strong pipeline and presence in high-impact markets, Medtronic expects continued growth in affected person care and market management. The corporate’s diversified progress technique positions it effectively for sustained success.
Medtronic’s FY24 Impression Report highlighted main sustainability achievements, together with a 52% discount in greenhouse gasoline depth and a 33% lower in product grievance charges. The corporate invested $2.7 billion in analysis and improvement and expanded affected person entry to serve over 78 million folks. These efforts reinforce Medtronic’s dedication to innovation, transparency, and international healthcare influence.
Supply: Investor Presentation
Progress Prospects
Medtronic is investing in progress, each organically through R&D and thru acquisitions. The primary catalyst for Medtronic is the growing old inhabitants. There are ~70 million Child Boomers within the U.S., these aged 51-69 years. 1000’s of individuals are getting into retirement every single day. Mixed with longer life expectancy and rising healthcare spending, the working setting could be very enticing for Medtronic.
The corporate has had many regulatory product approvals previously yr. The brand new merchandise ought to drive progress, permitting the corporate to keep up or acquire market share.
Supply: Investor Presentation
Medtronic additionally has a significant progress alternative in new geographic markets. Particularly, Medtronic has a presence in a number of rising markets, equivalent to China, India, Africa, and extra. These international locations have massive populations and excessive financial progress charges.
Medtronic’s rising market income has constantly grown double-digit for a few years. Whereas the U.S. at the moment accounts for simply over half of Medtronic’s income, rising markets are rising quicker.
Medtronic is buying tuck-in acquisitions and has spent greater than $3.3 billion on 9 acquisitions since 2021. These corporations embrace Acutus Medical, Medicrea, RIST, Avenu Medical, Companion Medical, Sonarmed, intersect ENT, AFFERA, and AI Biomed.
Total, we count on Medtronic to develop its earnings-per-share by 7.0% per yr on common till 2030.
Aggressive Benefits & Recession Efficiency
The primary aggressive benefit for Medtronic is its analysis and improvement capabilities. The corporate spends closely on R&D annually, which offers it with product innovation. Medtronic’s R&D investments over the previous few years exceed $2 billion annually.
The results of all this spending is that the corporate has an enormous mental property portfolio with almost 86,000 awarded patents. This truth has allowed Medtronic to construct a powerful product pipeline throughout every of its enterprise segments.
As well as, Medtronic advantages tremendously from its international scale. The corporate operates in over 140 international locations world wide. It has the operational flexibility to generate industry-leading revenue margins, which helps gas its progress.
One other aggressive benefit for Medtronic is that it operates in a defensive {industry}. Customers typically can’t forego medical remedies, even when the economic system is in recession.
Medtronic’s earnings-per-share throughout the Nice Recession are as follows:
- 2007 earnings-per-share of $2.61
- 2008 earnings-per-share of $2.92 (12% improve)
- 2009 earnings-per-share of $3.22 (10% improve)
- 2010 earnings-per-share of $3.37 (5% improve)
Medtronic had the uncommon achievement of earnings progress annually throughout the recession. The corporate additionally confirmed outstanding energy throughout the pandemic. This demonstrates its recession-resistant enterprise mannequin.
Medtronic ought to have the ability to proceed rising its dividend annually in each financial recessions and expansions.
Valuation & Anticipated Returns
Based mostly on the latest share worth of ~$90 and anticipated earnings-per-share of $5.47 in fiscal 2025, Medtronic inventory trades for a price-to-earnings ratio of 16.5. The inventory’s present valuation is beneath that of the broader S&P 500 Index and modestly beneath its long-term common.
Within the final decade, shares of Medtronic have traded arms at a median price-to-earnings ratio of 17.0. We consider that it is a honest valuation baseline.
Consequently, Medtronic shares look like barely undervalued at present. If the inventory valuation expands to our honest worth estimate by 2030, the corresponding a number of growth will increase shareholder returns by roughly 1.0% per yr over this era.
We count on 7% annual earnings progress for Medtronic by means of 2030, and the inventory has a 3.1% dividend yield. There’s loads of room for continued dividend will increase annually.
With a dividend payout ratio of simply over 51%, and a constructive earnings progress outlook, Medtronic ought to proceed its streak of annual dividend will increase.
Complete returns would encompass the next:
- 7.0% earnings progress price
- 1.0% a number of growth
- 3.1% dividend yield
Medtronic is anticipated to return 11.1% yearly over the following 5 years. That is a horny potential price of return, giving the inventory a purchase ranking.
Ultimate Ideas
Medtronic has just about the entire qualities dividend progress traders ought to search for. It possesses a extremely worthwhile enterprise, a management place in its core markets, and long-term progress potential. It additionally has a number of catalysts for future progress and the power to continue to grow its dividend even throughout recessions.
Medtronic has elevated its dividend for greater than 4 many years, which is extremely spectacular given the continued headwinds from a troublesome macroeconomic setting.
Medtronic inventory seems to offer a compelling funding alternative for long-term dividend progress traders.
Moreover, the next Certain Dividend databases include probably the most dependable dividend growers in our funding universe:
For those who’re on the lookout for shares with distinctive dividend traits, contemplate the next Certain Dividend databases:
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