Leading medical device player,
) announced a 7.2% increase in its cash dividend for fiscal 2013.
With this hike, the dividend for the quarter comes to 26 cents per
share or $1.04 per share for fiscal 2013, up from 97 cents in the
The increased dividend will be paid on July 27, 2012, to
stockholders of record on July 6, 2012. Medtronic has been paying
dividends consistently, which has more than doubled over the past
five years. In fact, this marks the 35
consecutive year of increasing dividend. The previous dividend hike
of 8% to 24.25 cents was announced in June 2011. Accounting for the
most recent hike, the dividend yield comes to 2.75% while the
payout ratio is 30%.
Medtronic's strategy is to return 50% of free cash flow to
shareholders through dividends and share repurchases. During fiscal
2012, the company generated free cash flow of approximately $4
billion and paid over $1 billion in dividends besides repurchasing
$1.4 billion worth of shares (including shares repurchased to
offset the dilutive impact of the divestment of the Physio-Control
During the recently held Analyst Day, the company announced its
target to generate $25 billion in free cash flow over the next five
years ($17 billion generated in the past five years). Additionally,
attempts would be made to increase the proportion of cash generated
in the US to counter the imbalance caused by more cash being
generated outside US.
) beefed up its quarterly dividend to 23 cents a share from 21
cents, representing a 10% hike in February 2012. This lifted the
annual dividend to 92 cents per share from the previous payout of
84 cents and equates to a dividend yield of roughly 2.5%, lagging
the yield of Medtronic.
Medtronic reported a strong fourth quarter with both revenues
and adjusted earnings per share exceeding the Zacks Consensus
Estimates. While the core segments of ICDs and spinal implants
continue to bother, the situation is gradually stabilizing. We are
encouraged by Medtronic's focus on portfolio expansion along with
an aim to boost revenues from the emerging markets.
Recently launched products such as Resolute and the Revo MRI
SureScan pacemaker have enabled the company to increase its share
in the respective markets. Disappointing Infuse sales, however,
continue to affect the beleaguered Spinal segment.
We have a Neutral recommendation on Medtronic. The stock retains
a Zacks #3 Rank (hold) in the short term.
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis
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