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Medtronic PLC (MDT) Dividend Stock Analysis

Medtronic PLC (NYSE:MDT) manufactures and sells device-based medical therapies worldwide. This dividend champion has paid dividends since 1977 and increased them for 39 years in a row.

The company’s last dividend increase was in June 2016 when the Board of Directors approved a 13.10% increase (1) to 43 cents/share. The company’s largest competitors include Baxter International Inc (NYSE:BAX), Becton Dickinson and Co (NYSE:BDX) and St Jude Medical Inc (NYSE:STJ).

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Over the past decade this dividend growth stock (2) has delivered an annualized total return of 5% to its shareholders.

The company has managed an impressive increase in annual EPS growth since 2006. Earnings per share have risen by 8.80% per year. Analysts expect Medtronic to earn $4.57 per share in 2017 and $5.04 per share in 2018. In comparison Medtronic earned $5.16/share in 2016.

The company has consistently repurchased stock (3) over the past decade, and has reduced its share count from 1,217 million shares in 2006 to 1,014 million in 2014. As a result of the acquisition of Covidien, the number of shares have increased to 1.423 billion.

The growth in earnings per share will be achieved by introductions of new devices, strategic acquisitions, cost containment initiatives as well as an increase in foreign sales. The company acquired Covidien in 2015, and is working on realizing synergies. By moving its headquarters from the US to Ireland, the company reduced its corporate tax rate from 35% to 12.50%.

Some cost containment initiatives that Medtronic PLC (NYSE:MDT) had started a few years ago are starting to bear fruit. Another factor that could help EPS growth is the consistent repurchase of stock by the company. New initiatives as well as expanding into non-traditional markets, could bolster growth. Last but not least, emerging markets such as China and India could present solid opportunities for growth, as emerging markets in general could deliver double digit percentage increases in sales over the next decade.

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