Medtronic’s Dividend Yield Draws Little Wall Street Attention Despite Strong Fundamentals

Key Points

• Medtronic offers a 3.2% dividend yield at current share prices.
• The company has increased dividends for 49 consecutive years.
• Medtronic recently spun off its diabetes care business.

Shares of Medtronic (NYSE: MDT) have been struggling for years, down more than 7% so far in 2026 and off by over 32% over the past five years.

The Irish medical device company posted its fiscal 2027 first-quarter report on Sept. 1, and despite strong results, the market’s reaction was tepid, with shares falling 3% since the report’s release.

There is an upside for investors considering the medical equipment stock, however. While the underlying business appears to be in the midst of a comeback, its declining share price has pushed the dividend yield up to 3.2%.

That is 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. With 49 consecutive years of dividend increases, the company is just one year from joining the list of Dividend Kings. It raised its dividend by 1.4% this year.

Image source: Getty Images

Don’t call it a comeback — yet

There are solid reasons for investors to be wary about the stock, though. Medtronic is still separating itself from MiniMed (NASDAQ: MMED), the diabetes care business it spun off earlier this year, and it continues to deal 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 (NASDAQ: ISRG). While some 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 (NYSE: GMED) and Stryker (NYSE: SYK).

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 that integrate smoothly 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 willing to wait for the stock’s price to return to historical valuation levels. The stock is trading at a lower valuation than most of its competitors, making now potentially a good time to buy for those seeking dividend income and long-term growth.

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