Dividend Kings are the royalty of dividend stocks. These companies have increased their payments every single year for half a century. It's an elite group, with only 56 companies currently meeting the qualification.
A handful of others are steadily approaching their coronation into this select group. One of the closest to reaching this milestone is Medtronic (MDT +1.86%). The "dividend prince" is on track to earn a king's crown in the next two years.
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A very healthy dividend stock
Medtronic unveiled its latest dividend increase this May. The global healthcare technology company raised its quarterly payment to $0.71 per share ($2.84 annualized), up from $0.70 per share ($2.80 annually). That extended its dividend growth streak to 48 consecutive years. At the current rate, Medtronic's dividend yields 2.9%, more than double the S&P 500's dividend yield of 1.2%.
The company can easily afford to raise its dividend. Medtronic generated $5.2 billion of free cash flow in its 2025 fiscal year, covering its nearly $3.6 billion dividend outlay with ample room to spare. The company generated robust free cash flow, even after investing $2.7 billion in research and development (R&D) and an additional $1.9 billion in capital expenditures.
NYSE: MDT
Key Data Points
Medtronic also maintains a healthy balance sheet. It ended its last fiscal year with $2.2 billion in cash and equivalents, along with $6.7 billion in investments on its balance sheet, against $25.6 billion in long-term debt. That supports the company's strong A/A3 bond rating. The healthcare company's strong balance sheet allowed it to return additional cash to investors last year as it repurchased $3.2 billion of its shares. That meaningful share repurchase helped reduce its outstanding shares to such a degree that Medtronic's total cash dividend payments declined last year (from nearly $3.7 billion to under $3.6 billion) even though it continued to increase its dividend per share.
A healthy growth profile
Medtronic remains well-positioned to continue increasing its dividend in the coming years. The company is growing at a healthy rate. The medical technology company recently reported strong results for the second quarter of its 2026 fiscal year. Revenue increased by 6.6% while its earnings per share rose 8%. That enabled it to boost its full-year guidance. It sees its revenue rising 5.5% this fiscal year, while its earnings per share should increase by 4.5%.
The company is positioning its business to continue growing at a healthy rate in the future. Medtronic significantly increased its R&D spending in the second quarter to drive future growth. Additionally, it increased its investments in sales and marketing for its growth program to capitalize on the demand for some of its key products.
Medtronic is also working to sharpen its strategic focus on its core businesses. The company revealed plans to separate its diabetes business earlier this year. It expects to complete a series of capital market transactions, including a potential IPO of the unit and subsequent split-off of the business. This move should ultimately boost the company's margins and earnings per share. It intends to use the proceeds from this transaction to repurchase more shares. As such, the separation won't impact its dividend.
The healthcare company also formed a new growth committee to guide its evaluation and execution of acquisitions, R&D investments, and additional divestments. It's part of the company's strategic aim to accelerate growth in the coming years.
A future king
Medtronic has all the makings of a future Dividend King. The global healthcare technology company has increased its payment for 48 straight years, putting it on the cusp of reaching a crowning achievement. The company is well-positioned to reach that milestone, thanks to its healthy financial profile and growth prospects. That makes it an excellent stock to buy for those seeking a healthy and steadily rising dividend.
