Medtronic’s dividends may increase even more

Medical equipment manufacturer Medtronic plc (MDT) It has been raising dividends for its shareholders for over 40 years. But the most important thing is that the company has a reserve in order to continue to increase payments. Medtronic’s divided growth has remained steady for 44 years, making the company and so-called “dividend aristocrat.” Most likely, the trend will continue at least in the medium term.

This is because Medtronic has a reliable payout ratio. The average estimate of Wall Street analysts assumes the company’s profit of $5.66 per share for the current fiscal year, and the Medtronic dividend payout ratio will be 44.5%. The company’s ability to keep most of its profits after paying dividends should leave room to expand buyback programs and divided increases.

That in the medium term, dividends will continue to grow by single digits over the next few years. Should note that currently the dividend yield of Medtronic is 2.3%. Innovation can be the key driver of Medtronic’s growth. Her commitment to research and development has led to the launch of over 200 products in the US, Western Europe, Japan and China over the past 12 months. New products allow sales and expand sales markets, which ultimately leads to an increase in profits.

An increase in the amounts that Medtronic returns to shareholders usually followed an increase in profits. Recall that last quarter Medtronic exceeded the forecast of Wall Street analysts for earnings per share (non-GAAP). The company generated $1.37 of adjusted diluted earnings per share in the third quarter, which corresponds to a growth rate of 6.2% compared to the same period last year.

Medtronic’s net margin increased by 120 basis points year-on-year to 23.8%. In addition, the reduction in the number of shares outstanding by 0.4% to 1.35 billion helped to increase the share of shareholders in profits. Thus, Medtronic continues to increase profits, which may be a harbinger of an increase in payments for shareholders.