1 Reason I'd Buy Medtronic Stock and Never Sell

The bull case for any stock often rests on several aspects of the business. That certainly applies to Medtronic (MDT 0.74%), a healthcare leader. Bulls could point to many reasons the stock is worth investing in and holding for the long term.

However, if I were to pick just one reason to buy and hold Medtronic, I would highlight the company’s dividend track record. Here is why.

Image source: Getty Images.

A fantastic dividend program

Medtronic has increased its dividends for 48 consecutive years. If it does so for a couple more years, it will be part of the exclusive group of Dividend Kings, companies with at least 50 consecutive annual dividend increases.

Why does this make Medtronic a stock worth buying and never selling? Because a streak of this caliber is incredibly difficult to maintain. Most businesses never even survive 48 years.

Of those that do, few are capable of sustaining years of payout increases without interruptions. The company’s accomplishment tells us something beyond it’s a great dividend stock. It strongly suggests that it’s a steady, reliable business that performs relatively well regardless of the economy. And once we look deeper, that’s exactly what we see.

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NYSE: MDT

Medtronic

Today’s Change

(-0.74%) $-0.72

Current Price

$96.86

Key Data Points

Market Cap

$124B

Day’s Range

$96.47 - $97.86

52wk Range

$79.55 - $106.33

Volume

7.2M

Avg Vol

7.7M

Gross Margin

67.46%

Dividend Yield

2.92%

Medtronic is one of the largest medical device companies in the world with a vast portfolio of products across several therapeutic areas. Its revenue growth won’t blow anyone out of the water (usually), but thanks to its wide footprint in the healthcare industry, sales and earnings tend to be consistent, if not eye-popping. Its innovative culture routinely earns clearance for newer products, as it did last year with its Hugo robot-assisted surgery system.

These factors and more have enabled Medtronic to support its outstanding dividend program. But even without looking at the details, the 48-year payout streak alone is a strong sign of a great business.

Buy it and forget it

Of course, past performance is no guarantee of the future. However, Medtronic’s well-established blueprint for success could continue helping it drive strong financial results and maintain its dividend program for a while. Management is getting rid of its low-margin diabetes-care business, which should help boost operating margins and profits.

Newer launches, such as the Hugo system and its pulse-field ablation treatment (a novel, minimally invasive procedure to treat some heart problems), should help drive strong sales growth in the medium term. And beyond that, we can expect the company to launch even more new products.

Not every investor will be attracted to the stock. Those looking for high-growth companies had better look elsewhere. But for those seeking reliable income, Medtronic is a great pick to buy and hold forever.