Medtronic (MDT 1.79%) is coming off a strong year. The company performed well in 2025, despite some threats to its business, including the impact of tariffs on its operations.
As 2026 begins, the good news is that Medtronic hasn't peaked yet. There are still solid reasons to consider buying shares of Medtronic this year, especially for long-term, income-seeking investors.
Let's consider three of them.
Image source: Getty Images.
1. Medtronic now has a simpler, more focused business
Last year, Medtronic announced that it would separate its diabetes business into a stand-alone, publicly traded entity. The transaction is expected to be complete by the end of this year, considering the timeline management provided to investors. There are several reasons why this is a great move for the medtech leader.
First, Medtronic was unable to keep pace with industry leaders in certain niches of the diabetes care market, including the development of top-of-the-line continuous glucose monitoring systems. Even within the insulin pump category, Medtronic had strong challengers.
Second, diabetes care is Medtronic's only direct-to-consumer unit, and it generates significantly lower operating margins than the rest of its business. In its fiscal year 2025, ending on April 25, 2025, diabetes care accounted for 8% of revenue but only 4% of operating profits. Once it gets rid of this division, Medtronic will be more focused on its B2B operations and should unlock more profitable growth opportunities.
NYSE: MDT
Key Data Points
2. Medtronic has a new growth driver
Last year, Medtronic received regulatory clearance in the U.S. for the Hugo system, a robotic-assisted surgery (RAS) device, for use in urologic procedures. This won't boost Medtronic's top-line growth this year, or even next.
However, it introduces an important long-term opportunity for the company, as robotic surgery is an underpenetrated market with attractive long-term prospects. That's because the minimally invasive procedures they enable allow surgeons to perform procedures with significant advantages, but many eligible procedures are still not being performed robotically.
Even with stiff competition from other medical device leaders, Medtronic's entry into this market represents an important development for the company. As shipments for the device gain traction and new indications help that, the Hugo system will eventually contribute meaningfully to Medtronic's results.
3. Medtronic has a fantastic dividend streak
Medtronic is an excellent stock for dividend-seeking investors. The healthcare giant has increased its payouts for 48 consecutive years while offering a forward yield of 3%. Medtronic is on track to become a Dividend King -- or a corporation with at least 50 straight years of annual dividend increases -- in the next couple of years. And it will continue hiking its payouts long after that. That's one more reason why the stock is a buy this year.
