Medtronic PLC's Dividend Analysis
Assessing the Sustainability of Medtronic PLC's Upcoming Dividend Payment
Medtronic PLC (NYSE:MDT) recently announced a dividend of $0.69 per share, payable on 2024-04-12, with the ex-dividend date set for 2024-03-21. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Medtronic PLC's dividend performance and assess its sustainability.
What Does Medtronic PLC Do?
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One of the largest medical-device companies, Medtronic develops and manufactures therapeutic medical devices for chronic diseases. Its portfolio includes pacemakers, defibrillators, heart valves, stents, insulin pumps, spinal fixation devices, neurovascular products, advanced energy, and surgical tools. The company markets its products to healthcare institutions and physicians in the United States and overseas. Foreign sales account for roughly 50% of the company's total sales.
A Glimpse at Medtronic PLC's Dividend History
Medtronic PLC has maintained a consistent dividend payment record since 1978. Dividends are currently distributed on a quarterly basis. Medtronic PLC has increased its dividend each year since 1978. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 25 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Medtronic PLC's Dividend Yield and Growth
As of today, Medtronic PLC currently has a 12-month trailing dividend yield of 3.29% and a 12-month forward dividend yield of 3.30%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Medtronic PLC's annual dividend growth rate was 8.00%. Extended to a five-year horizon, this rate increased to 8.10% per year. And over the past decade, Medtronic PLC's annual dividends per share growth rate stands at an impressive 10.40%.
Based on Medtronic PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Medtronic PLC stock as of today is approximately 4.86%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-01-31, Medtronic PLC's dividend payout ratio is 0.52.
Medtronic PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Medtronic PLC's profitability 7 out of 10 as of 2024-01-31, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Medtronic PLC's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Medtronic PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Medtronic PLC's revenue has increased by approximately 3.10% per year on average, a rate that underperforms approximately 64.04% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Medtronic PLC's earnings increased by approximately 4.80% per year on average, a rate that underperforms approximately 57.73% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 1.90%, which underperforms approximately 68.41% of global competitors.
Next Steps
In conclusion, Medtronic PLC's upcoming dividend, consistent dividend growth rate, reasonable payout ratio, and good profitability rank paint a picture of a reliable dividend-paying stock. However, the growth metrics indicate some areas where Medtronic PLC is lagging behind its peers, which could impact future dividend sustainability. Investors should weigh these factors carefully against their individual investment strategies and consider how Medtronic PLC fits into their portfolio. Given the mixed signals from the growth metrics, it may be prudent to monitor the company's performance in these areas closely. For those seeking to expand their dividend portfolio, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
