How Medtronic, Inc. (MDT) Overcame Obamacare to Hit Multi-Year Highs

Page 1 of 2

Obamacare has affected many companies throughout the health-care industry, but medical-device makers have taken a particularly large hit. That’s because the law imposed a 2.3% excise tax on sales of medical devices, hitting both profitable and unprofitable companies alike. Yet even though it’s subject to the tax, Medtronic, Inc. (NYSE:MDT) has managed to overcome Obamacare’s headwinds as the stock has climbed to levels not seen since before the financial crisis. The simple reason: a dividend history that demonstrates Medtronic, Inc. (NYSE:MDT)’s ability to weather similar storms in the past without harming investors in the process.

Medtronic, Inc. (NYSE:MDT)

Medtronic is a member of the elite Dividend Aristocrats list, where you’ll only find companies that have managed to increase their payouts to investors annually for at least 25 years. That’s a tall order for most companies, and only a few dozen stocks qualify to be Dividend Aristocrats. Let’s take a closer look at Medtronic, Inc. (NYSE:MDT) to see whether it can continue to keep its dividends rising despite the Obamacare tax.

Dividend stats on Medtronic

Current Quarterly Dividend Per Share $0.28
Current Yield 2.1%
Number of Consecutive Years With Dividend Increases 36 years
Payout Ratio 31%
Last Increase July 2013

Source: Yahoo! Finance. Last increase refers to ex-dividend date.

How Medtronic has kept its dividend strong
Medtronic’s stock has rewarded investors both through lucrative dividends and with share-price appreciation. Combining the two yields a 30% total return for Medtronic, Inc. (NYSE:MDT) so far in 2013, with the stock having held up well even during the overall market’s weakness over the past couple of months.

Medtronic’s latest quarterly earnings report shows just how well the company has managed to do even in a tough environment for the industry. Medtronic, Inc. (NYSE:MDT) reported cardiac sales that were up 4% year-over-year, and even though that might seem weak, it’s much better than its peers have done recently. Boston Scientific Corporation (NYSE:BSX) saw sales in its cardiac rhythm unit drop 5%, with international pricing pressure weighing on its ability to grow revenue. St. Jude Medical, Inc. (NYSE:STJ) reported an even bigger drop of 8% in its cardiac rhythm sales, with pacemaker-related revenue falling 12%. Medtronic, Inc. (NYSE:MDT) has also done a good job of taking advantage of international markets, with sales abroad rising 7% and representing half of its overall revenue. That success is particularly striking given that both St. Jude Medical, Inc. (NYSE:STJ) and Boston Scientific Corporation (NYSE:BSX) have seen declines in their international sales.

But Medtronic hasn’t seen everything go right. Back in May, the company said it planned to cut 230 jobs in its spinal business, which has been experiencing falling sales due to factors like Europe’s economic weakness and rising competition. Spine-rival Stryker Corporation (NYSE:SYK) also saw a 4% drop in segment sales last year, and it has also responded to adverse conditions in the industry by laying off employees. Stryker Corporation (NYSE:SYK) also specifically cited the Obamacare tax as a primary reason for its cost-cutting measures.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!