Medtronic (MDT 0.62%) investors don't have reason to sweat today, but they might want to start thinking about whether the company can sustain its dividend payments in the long run. Thanks to a handful of headwinds and chronically slow growth, it's possible that this colossus is starting to overextend itself.

But the dangers of a dividend cut aren't yet looming large, so some shareholders may prefer to stay the course and hope for better conditions. Here's the information you need to decide what to do.

A modest amount of trouble may be brewing

The first thing investors need to know about Medtronic and its chances of continuing to pay its dividend is that it's an absolutely gargantuan medical device manufacturer that makes a mind-boggling number of products distributed globally. In the last 12 months alone, it commercialized around 150 devices globally, ranging from blood oxygenation sensors to stents to robotic surgery platforms.

Sales of those myriad odds and ends brought in $30.7 billion in trailing-12-month revenue. So pretty much no matter what happens in the market or the global economy, this business will almost certainly survive because hospitals and operating rooms will always need a mix of hardware and consumable products.

That doesn't necessarily make it a good or safe investment, though. In fact, its dividend isn't looking so hot. Currently, Medtronic's forward dividend yield is 3%, which is decent, and its payout ratio is 87%, which is a bit on the high side. Its payout rose by a mediocre 36% over the last five years, but the real issue is that its quarterly net income fell by 16% in the same period, hitting $1.2 billion in quarter three of its fiscal 2023.

If its earnings keep crumbling, soon enough it'll be hazardous to hike the dividend. And if things get especially bad, within a few years it might need to slow the already modest pace of dividend increases or, perhaps halt future hikes altogether.

Management says the company is working to correct that issue by streamlining its operations, supply chain, and manufacturing functions and "enhancing" its corporate culture. Cost reductions are in the works, but leaders also anticipate more headwinds from global macroeconomic conditions, just as some of its pandemic-era supply chain and manufacturing issues are starting to recede. And at best, they estimate that Medtronic will probably only grow its top and bottom lines by around 5% annually in the near term.

Plus, there isn't much in the way of progress to show for those cost reductions. Its quarterly gross margin has deteriorated year over year since 2013. But at nearly 65%, the margin could decline a bit further before it would threaten the company's overall profitability, so a turnaround is fully possible. 

It isn't all bad, but tread carefully

Regardless of the above, there are a few things that make Medtronic's dividend likely to soldier on rather than be cut. First off, the company has hiked its payout every year over the last 45 years. So it's almost a Dividend King, which entails an unbroken 50-year streak of hikes. When it's that close to securing an additional tier of bragging rights, it'd likely take a catastrophe to throw things off track -- especially because management claims to prioritize the dividend.

Second, the company faces little pressure from its debt load of $28.1 billion, at least for now. In the trailing-12-month period, it repaid more than $3 billion in debt while reporting free cash flow (FCF) of $4.1 billion. But as it also issued $6.3 billion in fresh debt in the same timeframe, its use of leverage could eventually cause problems.

Given management's comments on the topic, it's likely that if the interest payments on new debt would pose a threat to investments in growth, Medtronic will eventually cut back on its share repurchasing policy rather than its dividend.

Therefore, you can probably buy Medtronic stock without worrying that your freshly minted income stream is going to get crimped in the next few years. Still, this behemoth is far from being in peak condition, and it probably won't be outperforming the market so long as it faces headwinds in numerous areas of its business.

Looking elsewhere for dividend income may be preferable as Medtronic's payout won't be worth much unless you're willing to hold it for quite some time.