Medtronic (NYSE:MDT) has performed very well this year, and with many products coming to market in the next couple of years, it could make for an exciting long-term investment. Medtronic's stock is up 26% year-to-date and is trading near its 52-week high with a market cap of $149 billion.

Let's take a closer look at the medical device company's Q2 fiscal 2020 results that it reported in November, and assess whether the price is right and if the stock is a good buy today -- or if investors should hold off for now.

Coming off a good quarter with even better results on the way

In November, Medtronic released its second-quarter results. The company beat analyst expectations despite only generating modest sales growth of 3% from the same quarter last year. Its Restorative Therapies Group division has been doing very well for the company, with its sales up 6% in Q2 and revenue from brain therapies growing the most, up by more than 10%. 

The company has many products coming down the pike that could help give its sales a boost in future quarters. CEO Omar Ishrak said he expects the latter half of fiscal 2020 to see more growth than what the first two quarters of the year have generated thus far. He also anticipates that new product launches will continue to deliver strong numbers in fiscal 2021 as well. Overall, the company's guidance remains unchanged for fiscal 2020, with Medtronic projecting organic growth to come in at 4% for the full year. 

Medtronic currently sells a wide range of products, including surgical imaging and navigation for neurological uses, surgical stapling and wound closure for general surgery, and insulin pumps for people who have diabetes. The company also has many cardiovascular products including catheters and pacemakers. Some of the more notable products in Medtronic's pipeline are "next-generation" technologies including a spinal cord stimulator to be used for pain therapy as well as an intraoperative nerve monitoring system that will add to its ear, nose, and throat products.

Medications on white pharmacy shelves

Image source: Getty Images.

Investors may be surprised to learn that despite not seeing significant sales growth, Medtronic's bottom line rose from $1.1 billion a year ago to $1.4 billion this past quarter -- an increase of more than 22%. Lower income taxes propped up the company's Q2 net income figure. Operating profit, which falls further up the income statement before non-operating items including interest and taxes, was down by 12.5%. 

Medtronic's priority is free cash flow. Strong free cash flow is necessary for a company to continue to grow and expand, especially for a healthcare stock like Medtronic, which needs money to promote its products and fund research and development. Last quarter, the company recorded $1.6 billion in free cash flow, which is well above the $957 million the company generated  in the prior-year quarter. Over the trailing 12 months, Medtronic's total free cash flow is $6.3 billion. 

Emerging markets present a terrific growth opportunity

The U.S. market represents more than half of Medtronic's sales, but it hasn't been a good source of growth for the company. In Q2, sales in the U.S. rose by a modest 2.1% from the prior year. The emerging markets segment, however, saw its revenue increase by an impressive 9.4%. 

Medtronic increased its sales in China, South Asia, the Middle East & Africa, and Eastern Europe, with all these regions seeing double-digit revenue growth this past quarter. One part of the world that has been particularly strong for Medtronic is Russia, where sales rose by 20% year over year. The company expects double-digit growth to continue in this segment, and focusing on these markets is a key part of its strategy. Generating sales from various parts of the world will help minimize Medtronic's exposure to any one country while potentially creating new opportunities along the way. 

Why Medtronic could be a good fit for long-term investors

In 2019, Medtronic's share price has risen by more than 27%, and it is now trading near its 52-week high. For value investors, the stock may be a bit too expensive as it is trading at more than 31 times its earnings, which is a high premium to pay for a company that's growing sales at just 3%.

However, Medtronic could be a good investment opportunity for investors who want a good, growing dividend. A Dividend Aristocrat, Medtronic has increased its dividend for more than four straight decades, and with strong free cash flow, it's in a good position to continue increasing those payments for many years. As the company continues to develop its products and grow in emerging markets, there could also be a lot of growth to come for Medtronic, but it may take some time for that to happen.

If you have patience and want a growing dividend, Medtronic could be a good fit for your portfolio.