If you have a solid portfolio that rakes in dividend income every few months, you’re in an excellent position to enjoy an early retirement.
Having a dividend income not only means ensuring that you pad your returns and grow your portfolio’s worth over the years but also eases the pressure to look for other revenue streams.
On top of that, if the businesses you’ve put your money in over the years boost their dividend payments, then you’ll also be receiving more recurring income, making it even easier to retire early.
In the biotechnology and healthcare world, the list of dividend stocks that hold outstanding track records in terms of delivering dividend payments regularly includes Medtronic (MDT). This stock can form part of the pillars to build your strong portfolio and is an investment worth considering for those who aim to retire early.
Medtronic qualifies as a dividend aristocrat, recording an impressive 45 consecutive years of payout increases. Unfortunately, shares of this business have not been less impressive lately. In fact, its stock is down 28% thus far.
At first blush, this stock performance looks discouraging. However, there are reasonable explanations behind it. A key factor is that practically half of Medtronic’s profits come from the international market. Taking into consideration the strength of the US dollar against other currencies, Medtronic’s constant-currency revenue should have risen.
Either way, Medtronic has been active in its research and development plans. In 2021, the company spent $2.7 billion on these efforts. As Medtronic sustains its record of clearing more than 200 regulatory approvals in the past 12 months and with the anticipated cooling off of the inflation woes, profitability will likely rebound.
Nonetheless, Medtronic’s consistent payouts make it an attractive buy for dividend growth investors looking for a stock that can serve as an anchor in their portfolio.
Medtronic offers a 3.6% dividend yield, which is more than twice the S&P 500 index of 1.7% yield. If this isn’t enough to entice shareholders to stay, the company is actually on pace to turn into a Dividend King by 2027. For context, a Dividend King is a stock in the S&P 500 that has boosted its dividend every year for at least 50 consecutive years.
Here’s a quick background on Medtronic.
The company is a titan in the medical device sector, boasting a dominant presence in more than 150 countries and generating a total of roughly $31 billion over the past trailing 12 months.
Its impressive array of products covers insulin pumps, pacemakers, and stents, offering treatments for about 70 different health conditions and reaching more than 76 million patients annually.
It has a solid patent base and stellar track record of medical innovation, equipping it with pricing power and practically insulating the company from headwinds that may affect any of its product categories or territory.
Thanks to its extensive and diverse product portfolio, Medtronic is considered the biggest pure-play medical devices company across the world, recording a whopping $104 billion in market capitalization.
All in all, this medical devices giant continues to be one of the most reliable names in the healthcare industry. Its longstanding history of success, continuous innovation, and solid business model all but guarantee that it can sustain its momentum no matter the economic conditions. While some factors have hurt its near-term performance, it’s clear that these setbacks are temporary.
The dip in Medtronic's share price is good news for long-term investors, especially since the company would recover from the setbacks soon enough. The recent bearishness has turned it into an even better buy, as it’s trading at only 15 times future earnings based on estimates.
