Unraveling the Dividend History, Yield, Growth, and Payout Ratio of Medtronic PLC (MDT, Financial)
Medtronic PLC (MDT) recently announced a dividend of $0.69 per share, payable on 2023-10-13, with the ex-dividend date set for 2023-09-21. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Medtronic PLC's dividend performance and assess its sustainability.
What Does Medtronic PLC Do?
One of the largest medical-device companies, Medtronic develops and manufactures therapeutic medical devices for chronic diseases. Its portfolio includes pacemakers, defibrillators, heart valves, stents, insulin pumps, spinal fixation devices, neurovascular products, advanced energy, and surgical tools. The company markets its products to healthcare institutions and physicians in the United States and overseas. Foreign sales account for roughly 50% of the company's total sales.
A Glimpse at Medtronic PLC's Dividend History
Medtronic PLC has maintained a consistent dividend payment record since 1978. Dividends are currently distributed on a quarterly basis. Medtronic PLC has increased its dividend each year since 1978. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 45 years.
Breaking Down Medtronic PLC's Dividend Yield and Growth
As of today, Medtronic PLC currently has a 12-month trailing dividend yield of 3.33% and a 12-month forward dividend yield of 3.37%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Medtronic PLC's annual dividend growth rate was 8.00%. Extended to a five-year horizon, this rate increased to 8.10% per year. And over the past decade, Medtronic PLC's annual dividends per share growth rate stands at an impressive 10.40%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-07-31, Medtronic PLC's dividend payout ratio is 1.01, suggesting that the company's dividend may not be sustainable.
Medtronic PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Medtronic PLC's profitability 7 out of 10 as of 2023-07-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Medtronic PLC's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Medtronic PLC's earnings increased by approximately -7.30% per year on average, a rate that underperforms than approximately 70.31% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 3.10%, which underperforms than approximately 66.8% of global competitors.
Next Steps
While Medtronic PLC (MDT, Financial) has a commendable history of consistent and growing dividends, investors should pay close attention to its high payout ratio and growth metrics. The company's profitability rank and net income suggest a strong financial position. However, the growth metrics indicate a slower pace compared to global competitors. Therefore, investors should carefully consider these factors when making investment decisions.
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