Shares of Medtronic (MDT +0.97%) have been struggling for years. They're down more than 7% so far in 2026 and off by more than 32% over the past five years.
The Irish medical device company posted its fiscal 2027 first-quarter report on Sept. 1, and despite its strong results, the market's reaction was tepid. Shares have fallen by 3% since the report was released.
There's an upside to this, though, for anyone considering investing in the medical equipment stock. While the underlying business appears to be in the midst of a comeback, due to its declining share price, its dividend yield has risen to 3.2%.
That's slightly more than three times the average dividend yield for the S&P 500. As Medtronic has improved its free cash flow, its payout ratio has dropped to around 59%, leaving room for additional dividend hikes. The company, with 49 consecutive years of dividend increases, is just one year from joining the list of Dividend Kings. It raised its dividend by 1.4% this year.
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Don't call it a comeback -- yet
There are solid reasons for investors to be wary about the stock, though. Medtronic is still in the process of putting some distance between itself and MiniMed (MMED -2.25%), the diabetes care business it spun off earlier this year, and it's still dealing with expenses related to that spinoff. Medtronic has also spent heavily to ramp up its Hugo RAS robotic surgery business to compete with industry leader Intuitive Surgical (ISRG +1.42%). While some of its segments, particularly its cardiovascular unit, are performing well, its neuroscience unit is experiencing slower growth due to intense pricing pressure and competition from rivals such as Globus Medical (GMED +0.34%) and Stryker (SYK +0.97%).
NYSE: MDT
Key Data Points
The company saw strong gains in its fiscal 2027 first quarter, booking revenue of nearly $9.8 billion, up 13.7% year over year. However, that fiscal period had an extra week compared with the prior-year period, which the company said added approximately $570 million to its organic growth.
Earnings per share (EPS) rose 40.7% to $1.14. The company also increased its full-year organic revenue growth forecast to a range of 7.25% to 7.75% (up from its previous guidance range of 6.75% to 7.25%) and raised the lower end of its non-GAAP diluted EPS guidance range to $5.94 from $5.90.
Cardiovascular revenue increased 18.9% organically to $3.93 billion, with cardiac ablation solutions jumping by 88%. Neuroscience grew 9.3%, while medical-surgical increased 10.2%.
It is building its business with strategic acquisitions
Rather than pursuing massive merger and acquisition deals, Medtronic continues to focus on targeted acquisitions with offerings that can smoothly integrate within its existing commercial distribution networks.
Earlier this year, Medtronic exercised its option to acquire CathWorks in a deal that included the 7FFR 3D System, an AI-powered diagnostic platform that evaluates coronary artery disease non-invasively using standard angiograms rather than invasive wires.
In June, the company bought Salt Lake City-based Scientia Vascular for $550 million. Scientia designs micro-guidewires and microcatheters tailored to navigate complex brain vasculature during hemorrhagic and acute ischemic stroke procedures.
In July, Medtronic beefed up its neuromodulation portfolio by buying SPR Therapeutics for $650 million. SPR developed the FDA-cleared Spring Peripheral Nerve Stimulation (PNS) System, a non-opioid, minimally invasive device that provides short-term nerve stimulation for chronic and acute pain relief.
Investors will get paid to wait
Medtronic isn't acting like a company in retreat. While it did jettison its diabetes segment, it's expanding its neuroscience and neurovascular care businesses.
The company's above-average dividend provides a nice cushion for long-term investors who are willing to wait for the stock's price to return to its historical valuation levels. The stock is trading at a lower valuation than most of its competitors. As such, now might be a good time to buy the stock to profit from its dividend and potential growth.
