Dividend Aristocrat Overview: Medtronic, Inc.

About Medtronic, Inc.

Medtronic supplies medical technologies to over 140 countries, including Ukraine, shown here. Photo courtesy U.S. Embassy Kyiv/flickr.com

Medtronic operates in over 140 countries, including Ukraine, shown here.
Photo courtesy U.S. Embassy Kyiv/flickr.com

Medtronic’s mission is to develop and market medical technologies that extend and enhance the lives of people around the world.  The company is organized into three separate divisions: Cardiac and Vascular Group, Diabetes Group, and Restorative Therapies Group.  Medtronic employs 46,000 people, holds over 26,000 patents and operates in over 140 countries around the world.

Medtronic was founded in 1949 and went public in 1959.  The company’s shares were traded over-the-counter until 1964 when the company was listed on the NASDAQ.  The shares began trading on the NYSE in 1977.  In 2013, Medtronic earned nearly $5.7 billion (EBIDTA) on revenues of $17 billion and is headquartered in Minneapolis, MN.

The company is a member of the S&P 500 index, a Fortune 500 company, and trades under the ticker symbol MDT.

Medtronic’s Dividend and Stock Split History

Medtronic has increased dividends annually since 1977 and met the criteria of 25 consecutive years of dividend growth in 2002.  The company usually increases their quarterly dividend in the 3rd quarter of the calendar year and is expected to announce the next increase around mid-June 2015.

In 2014, Medtronic increased the quarterly dividend by 2.5 cents per share – or 9.0% – to 30.5 cents per share.  Medtronic has grown its dividend from 78.5 cents per share in 2009 to $1.17 in 2014, resulting in a 5 year compounded annual dividend growth rate (CADGR) of 8.31%.  Longer term dividend increases are much better – the company sports a 10 year CADGR of 14.10%.  20 and 25 year CADGRs are 17.45% and 17.61%, respectively.  These numbers reflect the fact that Medtronic has increased the dividends by over 10% (and usually much more) since 1977 (except for the three years from 1984 to 1986) but since 2009 has slowed the annual dividend increases to between about 7.5% and 9.5%.

Since coming public, Medtronic has split its stock two for one 10 times.  These splits occurred in August 1967, January 1969, September 1972, July 1980, August 1989, August 1991, September 1994, September 1995, August 1997, and September 1999.

While the company has not split its stock since becoming a Dividend Aristocrat, 100 shares purchased in mid-2002 (when the company increased dividends for the 25th consecutive year) would have cost about $3,500 and had a dividend yield of less than 1%.  Those 100 shares are now valued at about $6,000 and are yielding around 1.8%.  Ignoring any dividend reinvestment, the annual return to investors has been a very modest 4.5%.

Medtronic’s Direct Purchase and Dividend Reinvestment Plans

Medtronic offers both a direct purchase and a dividend reinvestment plan.  Investors interested in participating in either of these plans can find information at the Wells Fargo Shareholder Services website.  The minimum investment amount is $250 for new investors and $25 for additional investments.

The plans have both purchase and sales fees.  First, there is a $10 initial setup fee for new investors.  The transaction fee for check or direct debit purchases ranges between $1 and $3 depending on the method.  The transaction fee for dividend reinvestments is 5% of the purchase amount, up to $5.  Medtronic pays the commissions on purchases.

Sales fees range between $10 and $30, depending on the type of sale (batch, market, limit, or stop order), plus a $0.10 per share commission.  Investors will be charged $5 to directly deposit the proceeds into their bank account.  Other fees may apply as well, and investors should review the plan documents before participating in the plans.

Helpful Links

Medtronic’s Investor Relations Website

Current quote and financial summary for Medtronic, Inc.

Information on the direct purchase and dividend reinvestment plans for Medtronic

Want to learn about more great dividend growth stocks?  Check out the list of current S&P Dividend Aristocrats.

One thought on “Dividend Aristocrat Overview: Medtronic, Inc.

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