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Key Takeaways:
- Medtronic offers a 3.2% dividend yield, which is nearly the highest level seen in a decade.
- In 2025, the dividend is expected to be well-covered with a 52% payout ratio.
- Analyst estimates suggest nearly 28% total return potential over the next 3 years.
Medtronic is one of the largest medical technology companies in the world, supplying pacemakers, insulin pumps, and surgical tools used in hospitals and clinics globally.
With operations in over 150 countries and a broad product portfolio, the company plays a vital role in modern healthcare.
But while the business is stable, the stock has lagged behind. Shares have pulled back from previous highs due to slower growth, cost pressures, and supply chain issues.
That weakness has pushed the dividend yield up to multiyear highs.
Now, with earnings expected to rebound and the valuation still below normal levels, Medtronic might offer both reliable income and long-term upside for patient investors.
Analysts Think the Stock is Undervalued Today
Medtronic shares currently trade around $90/share, but based on TIKR’s guided valuation model, the stock could reach ~$114/share by April 2028.
That implies +27.8% total returns, or about 9.2% annually, if the business sees mid-single-digit annual revenue growth.
The projection assumes stable operating margins of around 26% and continued product demand across cardiovascular, surgical, and diabetes segments.
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A 3.2% Dividend Yield Near the Top of Its Historical Range
Medtronic’s forward dividend yield sits at 3.2%, which is well above its 10-year average of 2.4% and close to the highest level the stock has offered in over a decade.
While shares have traded sideways over the past few years, Medtronic has steadily grown its dividend payout, which has pushed the dividend yield higher.
That gap between a declining stock and a rising dividend has made the yield more attractive. For most of the last decade, MDT traded between a 2% and 2.5% yield.
The core business remains stable, and today’s higher yield may offer income-oriented investors a chance to buy into a consistent payer at a more favorable entry point.
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Dividend Looks Safe With Room to Grow
Medtronic is expected to earn $5.49 per share and pay out $2.86 in dividends in fiscal 2025, putting the payout ratio at a healthy 52%, comfortably within the company’s long-standing target range of 40% to 50%.
By 2027, analysts expect Medtronic to grow earnings to $6.01 per share and increase its dividend to $2.98, reflecting annual EPS growth of about 4% and dividend growth of 2% to 3%, with the payout ratio expected to hold steady near 50%.
Analysts project EPS growth of around 4% annually through 2027, while dividend growth is expected to average 2% to 3% per year over the same period.
Medtronic’s earnings growth is expected to come from a mix of cost-cutting, better surgical volumes, and new product launches.
Key innovations include the Micra AV2 pacemaker for minimally invasive heart rhythm treatment, the Hugo surgical robot for precision-assisted procedures, and the MiniMed 780G insulin pump for automated diabetes management.
The company is also expanding in emerging markets, which could help improve margins and drive scale.
Medtronic raised its dividend for 47 consecutive years, adding further confidence in its ability to keep rewarding shareholders through different market cycles.
See Medtronic’s full growth forecast and analyst estimates. (It’s free) >>>
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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 stocks mentioned. Thank you for reading, and happy investing!
