If you're looking for a dividend stock to add to your portfolio, you know there are plenty of options out there. However, if you want to make the most of your investment, you don't want to just buy any dividend stock -- you want a great one that you can buy and not worry about.

To do that, you'll need to consider not just the stock's current yield, but also its track record for increasing dividend payments and how safe those dividend payments are. Today, I'll look at whether medical device company Medtronic (NYSE:MDT) is a great dividend stock and whether you should consider adding it to your portfolio.

Does the stock pay an above-average yield?

Currently, Medtronic pays its shareholders a quarterly dividend of $0.58. With shares of the Irish company trading at about $97, that means the dividend yield is about 2.4% -- above the S&P 500 average of about 2%. The stock ticks off the first checkbox. Next, let's take a look at whether investors can expect this dividend to grow.

Sun shining on a jar full of coins.

Image source: Getty Images.

Can investors expect their dividend payments to grow?

In May, the company announced that it would be increasing its quarterly dividend payments from $0.54 to $0.58. The 7.4% bump up in dividends marks the 43rd consecutive year in which Medtronic's increased its payouts. As a Dividend Aristocrat, Medtronic looks to be a safe bet to continue raising its payouts for the foreseeable future.

Another important question, however, is how big those hikes have been. After all, if a company's raising its dividend payments by just 1% every year, it's going to take a while for that growth to amount to a meaningful increase in recurring income for investors. 

Five years ago, Medtronic was paying its shareholders a quarterly dividend of $0.38. That means it's raised the dividend payments by 53% since then, which averages out to a compound annual growth rate of 8.8%.

That's a fairly high rate of increase; if Medtronic were to keep that going, it would take about nine years for its dividend payments to double. However, its latest rate hike was more modest, and with the COVID-19 pandemic adversely affecting the economy and many companies, it may be a bit too optimistic to expect the average increases to continue. Nonetheless, even if the company raises its dividend at a lower rate going forward, it'll likely still be much higher than the rate of inflation.

Medtronic's dividend is above average, and it's been growing at a great clip, but one of the most important questions is whether the payouts are safe.

Is Medtronic's dividend sustainable?

With many companies are slashing or suspending their dividend payments amid the coronavirus pandemic, it's more important than ever for investors to consider the safety of a payout. 

Medtronic released its most recent quarterly results on May 21, for the fourth quarter ending April 24. It wasn't a strong period for the company, with sales down by 26%. Net income of $646 million was down 45% from $1.2 billion in the prior-year period.

The positive news, however, is that with free cash flow of $1.1 billion, Medtronic still had plenty of room to cover its dividend payments of $724 million during the quarter. It's a great sign that even amid such tumultuous times -- and sharp reductions in income and revenue -- the dividend still looks to be safe.

The dividend is great -- but is the stock a buy?

Medtronic ticks all the boxes of being a great dividend stock, so it could provide investors with a terrific source of income for their portfolios for many years. Unfortunately, the stock itself has been underwhelming in 2020.

Year to date, shares of Medtronic are down 15%, while the S&P 500 is up about 1%. The company's been hit hard by hospitals deferring procedures due to COVID-19, which has weighed on results and made investors bearish on the stock. However, as cities and states eventually reopen and try to get back to normal, there should be a bit more normalcy in the day-to-day operations for hospitals. This should will result in fewer deferred procedures, leading to some stronger numbers for Medtronic in the quarters ahead.

Although COVID-19 cases are spiking in the U.S. again, which could jeopardize the economy's recovery, these are still short-term issues that shouldn't impact the attractiveness of Medtronic as a long-term investment. Overall, Medtronic is likely to recover from the recent downturn; it's just a matter of how long it will take. For long-term investors, this healthcare stock is a definite buy.