16 Oct medtronic dividend aristocrats
Most important for dividend investors is the company’s high free cash flow (FCF) margin, because free cash flow is ultimately what funds the company’s generous capital return program (buybacks and dividends) for shareholders. Fortunately, Medtronic stock will offset its overvaluation with earnings growth and dividends. Overview. Covidien is a manufacturer of medical devices such as surgical, respiratory, lung health, renal care and gastrointestinal products. In fact, the stock’s yield is just slightly higher than the average yield of the S&P 500. Dividend Payout Ratio measures how much of a company’s free cash flow is paid out in the form of dividends. Today, Medtronic is one of the largest healthcare companies in the world. Any thoughts from you on this? However, that doesn’t mean there aren’t risks to consider. Over the past 68 years the company has grown into one of the world’s largest medical equipment device companies, with 85,000 employees now working out of over 480 locations in about 160 countries and helping to treat over 40 medical conditions and 70 million patients in 2016 . And although MDT’s current dividend yield of 2.1% may not be that much higher than the S&P 500’s 1.9%, it is higher than MDT’s historic median yield of 1.9%. For example, when we compare Medtronic’s balance sheet to its peers, we can see that, while its leverage ratio (Debt/EBITDA) is still high, it’s actually inline with the industry average.
Based on the recent closing price of $111 and the midpoint for expected earnings-per-share of $5.60 in fiscal 2020, Medtronic stock trades for a price-to-earnings ratio of 19.8. With shares trailing the market over uncertainty surrounding government healthcare reform, contrarian investors might be interested in giving Medtronic a closer look. Medtronic also has a major growth opportunity in new geographic markets. Fortunately, Medtronic has a solid capital allocation strategy that should serve it well in the future. It’s learning to live on less than you make, so you can give money back and have money to invest. In fact, over the past 22 years Medtronic has only yielded 2% or above 23% of the time. This combination of operating in a defensive (i.e.
That means a rich history of large R&D spending (7.4% of revenue over the last 12 months), which has led to over 4,800 patents for world-changing inventions such as the pacemaker in 1957. This leaves lots of cash flow for making smart acquisitions that add to bottom line, increase dividends and repurchase shares. This pattern is the most common among the Dividend Aristocrats.
Any forward-looking statements are subject to risks and uncertainties such as those described in Medtronic's periodic reports on file with the Securities and Exchange Commission. Let’s take a look at what makes this medical blue chip stock so special and see if it’s likely to continue increasing its dividends at a double-digit clip over the coming years. Specifically, Medtronic has a presence in several emerging markets, such as China, India, Africa, and more. The company is a Dividend Aristocrat, which means it is one of the few S&P 500 index components that has raised its distribution at least once annually for … Another competitive advantage for Medtronic is that it operates in a defensive industry.
Over the last decade, Medtronic has grown its revenues from $15.39 billion in 2010 to $30.557 billion in 2019. Prior to the acquisition, Medtronic was primarily known for its cardiac and coronary devices (e.g.
It certainly seems like an issue that won’t affect the company’s long-term earnings power, so I agree with you.
And, thanks to the favorable economics of the U.S. healthcare industry, Medtronic should enjoy many years of growth up ahead. Medtronic employs more than 90,000 people worldwide, serving physicians, hospitals and patients in more than 150 countries. Revenue growth of 7% CAGR over 10 years due to skillful management making profitable acquisitions and adding to the company’s strong list of medical products. Measuring Dividend Payout Ratio of Medtronic Stock, Stock’s Valuation versus S&P 500 and Health Care (XLV), Medtronic Investor Relations | Dividend History. Growth was seen across all segments including Cardiovascular group reporting 1.8% growth thanks to TAVR minimally invasive surgical products, Restorative Therapies group reporting 3.6% growth thanks to Spine and Trauma surgical products, strong international growth of 16% in Diabetes group and strong performance out of emerging markets including China, Southeast Asia and Europe. That’s why Medtronic, despite having over $33 billion in total debt, still enjoys a very strong investment-grade credit rating that allows it to borrow at very low interest rates (average debt cost of 2.2%). We expect 6% annual earnings growth for Medtronic through 2024. About Us |
However, we feel Medtronic deserves a slightly higher valuation than the 10-year average. For full year 2020, management expects organic growth of 4.5% and revenues coming in between $8.4 billion to $8.5 billion. We use cookies for a number of reasons, such as keeping our website reliable and secure, personalising content and ads, providing social media features and to analyse how our website are used. You generally have to buy full shares of the dividend aristocrats… With a dividend payout ratio near 39%, and a positive earnings growth outlook, there is plenty of room for Medtronic to continue increasing its dividend each year. A dividend payout ratio of 38% is very strong leaving cash for future dividend increases, making smart and accretive acquisitions, share repurchases and increasing sales staff to grow revenues.
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