Key Takeaways
- Medtronic completed the separation of its diabetes business on Oct. 15, and AbbVie raised its quarterly dividend 5.2% to $1.82 a share on Oct. 30.
- Medtronic yields 3.0% against AbbVie’s 2.5%, and its dividend used 60% of free cash flow over the trailing 12 months, against 65% for AbbVie.
- AbbVie’s dividend is growing faster, so at each company’s current pace, its income on the same investment would pass Medtronic’s in about four years.
- The thing to watch is whether AbbVie’s free cash flow rebounds in 2026 as analysts expect.
Medtronic (MDT) finished separating its diabetes business on Oct. 15. Two weeks later, AbbVie (ABBV) raised its dividend 5.2%.
That leaves dividend investors weighing Medtronic’s 3.0% yield, now paid by a narrower company, against AbbVie’s 2.5% yield and its faster raises. So which is the better dividend stock?
| Metric | Medtronic (MDT) | AbbVie (ABBV) |
|---|---|---|
| Dividend yield | 3.0% | 2.5% |
| Annual dividend, current rate | $2.88 | $7.28 |
| Dividend growth, 5 years | 4.1% a year (fiscal 2021-2026) | 6.6% a year (fiscal 2020-2025) |
| Cash dividend payout ratio, TTM | 60% (to July 31, 2026) | 65% (to Sept. 30, 2026) |
| Cash dividend payout ratio, forward | 58% (fiscal 2027 consensus) | 52% (fiscal 2026 consensus) |
| Net debt/EBITDA | 1.8x | 2.0x |
| Interest coverage | 10.4x | 8.2x |
Source: TIKR and the companies, as of Nov. 5, 2026.
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Medtronic pays more, and raises slowly
Medtronic’s business is humming. Revenue rose 13.7% to $9.8 billion in the first quarter of fiscal 2027, which ended July 31, and cardiac ablation sales jumped 88%. Management raised its full-year organic growth forecast to 7.25%-7.75%.
The dividend is well-covered too, using 60% of free cash flow over the 12 months to July 31 and 58% on analysts’ fiscal 2027 estimates. But free cash flow has stayed between $4.6 billion and $6.0 billion a year since fiscal 2019, while dividends paid rose from $2.69 billion to $3.64 billion:
And the raises have slowed. Medtronic’s dividend per share rose just 1.4% in fiscal 2026, which ended in April, against 4.1% a year from fiscal 2021 to fiscal 2026.
The MiniMed split leaves fewer shares to pay and less cash to pay them with. Medtronic swapped its remaining MiniMed stake for 55 million of its own shares, and it gave up a Diabetes business that had grown 16.9% in the quarter to July 31 and is still counted in the 12-month figures above. Shares rose 12% between Sept. 30 and Oct. 30 as the split closed.
AbbVie raises faster, on less cushion
AbbVie’s check is smaller than Medtronic’s, but it grows faster. The new $1.82 quarterly rate starts with the payment on Feb. 16, 2027. AbbVie is a member of the S&P Dividend Aristocrats, and it has raised its quarterly dividend 355% since its inception in 2013.
The business behind it is growing, too. Third-quarter revenue rose 10.3% to $17.4 billion, led by Skyrizi, up 22.7% to $5.78 billion. AbbVie also raised its 2026 adjusted EPS forecast to $13.95-$13.99. Humira fell 31.2% to $683 million as biosimilars keep taking its sales.
Coverage has slipped, though. Free cash flow fell from $24.3 billion in fiscal 2022 to $17.8 billion in each of the last two years, while dividends paid rose from $10.0 billion to $11.7 billion:
That took the cash dividend payout ratio from 41.4% in fiscal 2022 to 65.4% in fiscal 2025, and it was still 65% over the 12 months to Sept. 30. On its third-quarter call, AbbVie said its free cash flow is strong enough to fund a growing dividend and more deals. But two flat years of cash flow and a rising payout leave it less room than it had.
So which dividend wins?
I’d pick AbbVie as the better dividend stock. Its dividend is growing faster, and so is the business behind it. AbbVie’s dividend rose 5.7% in fiscal 2025, and Medtronic’s rose 1.4% in fiscal 2026. At those paces, AbbVie’s income on $10,000 would pass Medtronic’s in about 4.4 years, in 2031, and pay about $413 in year 10 against about $341.
Its coverage should improve, too, if analysts are right. Their consensus has AbbVie’s free cash flow climbing to $23.1 billion in fiscal 2026 and $33.4 billion in fiscal 2027:
The 2026 figure would bring the cash dividend payout ratio down to 52%, under Medtronic’s 58% on fiscal 2027 estimates. Only three analysts make that 2026 estimate, though, and last year’s final consensus was 10% off the actual.
Medtronic has a strong case of its own. Its $10,000 pays $300 a year today against AbbVie’s $250, its dividend had more room over the last 12 months, and it carries less debt, at 1.8x net debt/EBITDA against 2.0x. But a dividend rising 1.4% a year falls behind, and AbbVie has the growth to keep raising.
If AbbVie’s free cash flow stays near $17.8 billion, its payout keeps climbing, and Medtronic’s better-covered check would look like the safer pick.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
