When it comes to medical devices, to me some of the most interesting are robotic surgical systems. Intuitive Surgical has been a leader in that area, with average annual gains of 19% over the last 15 years. However, his stock is a bit elevated these days and he’s not the only game in town either.
Consider medtronic (NYSE: MDT)which is moving towards robotic surgeries while remaining a titan in the world of medical devices. Its valuation is more compelling, sporting a recent forward-looking price-to-earnings (P/E) ratio of 16.3, for example, a bit below its five-year average of 16.7.
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There are many things I like about this company. Let’s start with its dividend, which recently yielded 2.9%. Better yet, it’s been increasing that payout for 48 consecutive years. It’s a record it’s proud of, and you can be sure it aims to continue growing that dividend over time. That streak also reflects a well-run business, as it has been able to stay in business for decades while paying dividends to shareholders annually, and also increasing the payout annually.
Meanwhile, its payout ratio (the portion of earnings it pays out as dividends) was recently around 79%, leaving some room for further growth and suggesting the dividend is sustainable. Here’s a little more about Medtronic:
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It has more than 41,000 active patent matters.
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It employs more than 13,600 scientists and engineers in more than 150 countries.
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Treats over 70 health conditions with its offerings.
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It has more than 174 active clinical trials.
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It spends about $2.7 billion a year on research and development.
His treatments include surgery, endoscopy, cardiac ablation, neurovascular disorders, neuromodulation, pelvic health, gastric therapies, and cranial and spinal technologies, among others.
Medtronic has also had a diabetes division, which offers services and therapies for insulin-dependent patients. But, in particular, to focus on faster-growing businesses, it will spin off this unit in early March, with the goal of reaching a valuation close to $8 billion. (Medtronic’s market value at the time of writing is $124 billion.)
We all want the companies we invest in to grow, and Medtronic is growing. Its recently reported third quarter featured an 8.7% year-over-year revenue increase and, more importantly, gained FDA approval for its Hugo robotic surgery system. CEO Geoff Martha noted: