The bullish case for any stock is often based on several aspects of the business. That certainly applies to medtronic (NYSE: MDT)a leader in healthcare. Bulls could point to many reasons why the stock is worth investing in and holding for the long term.
However, if I had to pick just one reason to buy and hold Medtronic, I would highlight the company’s dividend history. Here’s why.
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Medtronic has increased its dividends for 48 consecutive years. If you do this for a couple more years, you will be part of the exclusive group of Dividend Kings, companies with at least 50 consecutive annual dividend increases.
Why does this make Medtronic a stock worth buying and never selling? Because a streak of this caliber is incredibly difficult to maintain. Most companies don’t even survive 48 years.
Of those that do, few are able to sustain years of uninterrupted payment increases. The company’s achievement tells us more than just a stock with great dividends. It strongly suggests that it is a stable and reliable business that performs relatively well regardless of the economy. And once we look deeper, that’s exactly what we see.
Medtronic is one of the world’s largest medical device companies with a broad product portfolio across multiple therapeutic areas. Its revenue growth won’t blow anyone away (usually), but thanks to its broad presence in the healthcare industry, sales and profits tend to be consistent, if not amazing. Its innovative culture routinely wins approval for newer products, as it did last year with its Hugo robot-assisted surgery system.
These factors and more have allowed Medtronic to support its excellent dividend program. But even without looking at the details, the 48-year payment streak alone is a strong sign of a great deal.
Of course, past performance is no guarantee of the future. However, Medtronic’s well-established success plan could continue to help it generate strong financial results and maintain its dividend program for a while. Management is divesting its low-margin diabetes care business, which should help boost operating margins and profits.
More recent launches, such as the Hugo system and its pulsed field ablation treatment (a novel, minimally invasive procedure to treat some heart problems), should help drive strong sales growth in the medium term. And beyond that, we can expect the company to launch even more new products.