History has shown that purchasing stocks in resilient companies that can weather market highs and lows is an effective long-term investment strategy.
Ireland-based Medtronic (MDT -1.44%), a major player in the medical device industry, is one such company. For years, the company steadily increased its revenue and earnings, keeping its business stable. This allowed it to pay and raise dividends consistently for the past 46 years.
Let's look at its most recent quarterly results to see why it's a good investment right now.
MDT Revenue (Annual) data by YCharts
Medtronic grows revenue and earnings year in and year out
Medtronic sells medical devices around the world in four product categories: cardiovascular, medical-surgical, neuroscience, and diabetes. It operates in 150 countries and treats nearly 70 medical conditions.
Even during macroeconomic downturns, Medtronic generates relatively steady growth. In an effort to improve supply, lower costs, and increase earnings, the company started implementing an "aggressive transformation" strategy. Back in February, management predicted that short-term headwinds would fade and the company would resume growth in the coming quarters.
In fiscal 2023's fourth quarter (ended April 28), total revenue rose 5.6% year on year to $8.5 billion, thanks in part to a rebound in procedure volumes. According to management, supply improvements and new product development also contributed to this performance. All four of its segments expanded both domestically and internationally. Adjusted earnings per share (EPS) increased 3% year on year to $1.57.
Management said it anticipates a strong fiscal 2024 as the market opens to more elective procedures. For the full fiscal year, total organic revenue growth could range from 4% to 4.5%, while adjusted EPS could be between $5 and $5.10.
Management is pleased with the international rollout of Medtronic's robotic-assisted device, Hugo, which will be available in the U.S. markets soon. According to BIS Research, the robotic surgery market could be worth $15 billion by 2029. Medtronic has a lot of room to grow in this massive market.
Consistent dividend payouts are an added perk
Medtronic's dividend yield sits at 3.4%, which is considerably higher than the 1.7% average yield of the S&P 500. Along with the quarterly results, Medtronic announced another quarterly dividend raise to $0.69 per share from the earlier payout of $0.68. This marked the 46th straight year the company increased the dividend. Over the last 10 years, Medtronic has increased its dividend by 146%.
At the end of fiscal 2023, the company generated $4.5 billion in free cash flow, which should be enough to pay dividends and fund any growth initiatives in the coming quarters. The company remains committed to returning 50% of free cash flow to shareholders.
It is not too late to buy this stock
The global medical device market is expected to grow at a compound annual rate of 5.5% between 2022 and 2029, reaching $719 billion, according to industry experts. Medtronic's diverse portfolio and development in the medical devices segment should help it capitalize on this expanding market.
Medtronic has a diverse product portfolio and a long history of returning cash to shareholders, making it an appealing investment right now. Part of the appeal relates to Medtronic stock currently trading 17% below its 52-week high. It's not too late to buy this healthcare stock.
It takes time for growth stocks to reach their full potential. It's a bonus along the way if these growth stocks help investors by providing regular income through dividends while waiting for their investment to grow.
