Is it a good company at a reasonable price? Just because a stock is relatively cheap does not make it a good buy. With this stock it does seem to matter greatly what you pay for it to get a decent long term return. It is best to buy a stock you want in installments over a period of years and in different months. There is a wide range of opinions on if this is a good stock to have. If you do like a stock, it is always best to buy when it is relatively cheap.
I do not own this stock of Medtronic PLC (NYSE-MDT). In 2009 I was looking for a good US stock for my US$ account. I had heard good things about this stock and also it is in Health Care sector which is a weak sector in Canada. This is one of the few US stocks that I follow. If you invest in this stock, you should have a US$ account so you do any necessary CDN$/US$ exchanges when it suits you.
Note that this company has an April 30 year end. The year end I am looking at is for April 30, 2025.
When I was updating my spreadsheet, I noticed that this company does not meet what I like to see in total return over the years which is 8% from capital gains and dividends. In most years, the company has not done that. See Total Return paragraph below for years 5 to 35 to the end of 2024. This is not just recent. See below the total return to 2018. The total return was low for the 15 and 20 year durations. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 12.30% | 12.02% | 9.65% | 2.37% |
| 2008 | 10 | 10.31% | 13.70% | 11.22% | 2.48% |
| 2003 | 15 | 13.74% | 5.72% | 4.27% | 1.45% |
| 1998 | 20 | 14.64% | 5.84% | 4.61% | 1.23% |
| 1993 | 25 | 16.66% | 15.67% | 13.30% | 2.37% |
| 1989 | 29 | 16.74% | 17.94% | 15.21% | 2.74% |
If you had invested in this company in December 2014, for $1,010.80 US$ you would have bought 14 shares at $72.20 per share. In December 2024, after 10 years you would have received $313.04 in dividends. The stock would be worth $1,118.32. Your total return would have been $1,431.36. This would be a total return of 3.92% per year with 1.02% from capital gain and 2.90% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $72.20 | $1,010.80 | 14 | 10 | $313.04 | $1,118.32 | $1,431.36 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.08%. The 5, and 10 median dividend yields are moderate at 2.98% and 2.22%. This historical median dividend yield is low (below 2%) at 1.10%. The dividend yield has often been below 2% until 2023. The dividend growth is low (below 8% per year) at 5.3% per year over the past 5 years. The last dividend increase was in 2025 and it was for 1.4%.
The dividend growth has slowed down over the years with the last three years at 1.5%, 1.5% and 1.4%. They have a good record of dividend increases with dividend increases in 35 of the last 35 years, but their problem is that the DPR rates have been too high for a number of years. A good DPR rate is in the 40% range and it has been above that range since 2014. The thing is that the company also needs money to reinvest in their business. So, the higher the DPR the less money there is to reinvest in the company.
The Dividend Payout Ratios (DPR) are high. The DPR for 2024 for Earnings per Share (EPS) is too high at 78% with 5 year coverage at 84%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is high at 51% with 5 year coverage at 51%. You want this DPR to be in the 40% range or lower. The DPR for 2024 for Cash Flow per Share (CFPS) is high at 44% with 5 year coverage at 46%. You want this DPR to be 40% or lower. The DPR for 2024 for Free Cash Flow (FCF) is high at 63% with 5 year coverage at 59%. A number of sites agree with the FCF of $5,185M, but the range is from $5,185M to $5,680M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 77.56% | 84.21% |
| AEPS | 51.00% | 50.63% |
| CFPS | 44.32% | 46.29% |
| FCF | 63.19% | 58.60% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.24 and currently at 0.29. The Liquidity Ratio for 2024 is good at 1.85 and 2.01 currently. The Debt Ratio for 2024 is good at 2.11and 2.12 currently. The Leverage and Debt/Equity Ratios for 2024 are good at 1.91 and 0.90 and currently at 1.90 and 0.89.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.24 | 0.29 |
| Intang/GW | 0.49 | 0.60 |
| Liquidity | 1.85 | 2.01 |
| Liq. + CF | 2.12 | 2.48 |
| Debt Ratio | 2.11 | 2.12 |
| Leverage | 1.91 | 1.90 |
| D/E Ratio | 0.90 | 0.89 |
The Total Return per year is shown below for years of 5 to 35 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 5.33% | -4.10% | -6.78% | 2.67% |
| 2014 | 10 | 8.66% | 3.92% | 1.02% | 2.90% |
| 2009 | 15 | 8.53% | 7.00% | 4.06% | 2.94% |
| 2004 | 20 | 11.12% | 4.59% | 2.40% | 2.19% |
| 1999 | 25 | 12.13% | 5.14% | 3.19% | 1.95% |
| 1994 | 30 | 14.25% | 8.29% | 6.09% | 2.20% |
| 1989 | 35 | 14.78% | 16.06% | 12.03% | 4.04% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 27.00, 32.34 and 36.24. The corresponding 10 year ratios are 26.51, 29.06 and 33.56. The corresponding historical ratios are 23.45, 27.28 and 32.00. The current P/E Ratio is 23.75 based on a stock price of $96.68 and EPS estimate for 2026 of $4.07. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 14.39, 17.24 and 20.09. The corresponding 10 year ratios are 15.95, 17.79 and 19.71. The corresponding historical ratios are 14.39, 17.24 and 18.70. The current P/E Ratio is 17.17 based on a stock price of $96.68 and EPS estimate for 2026 of $5.63. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $68.79. The 10-year low, median, and high median Price/Graham Price Ratios are 1.19, 1.35 and 1.50. The current ratio is 1.41 based on a stock price of 96.68. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Book Value per Share Ratio of 2.32. The current ratio is 2.59 based on a Book Value of $47,893M, Book Value per Share of $37.36 and a stock price of $96.68. The current ratio is 11% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 18.67. The current ratio is 13.80 based on Cash Flow per Share estimate for 2025 of $7.01, Cash Flow of $8,980M and a stock price of $96.68. The current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 1.10%. The current dividend yield is 2.94% based on dividends of $2.84 and a stock price of $96.68. The current dividend yield is 167% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 2.20%. The current dividend yield is 2.94% based on dividends of $2.84 and a stock price of $96.68. The current dividend yield is 32% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 3.88. The current P/S Ratio is 3.49 based on Revenue estimate for 2025 of $35,537M, Revenue per Share of $25.04 and a stock price of $96.68. The current ratio is 12% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable, but could be cheap. The dividend yield tests are saying that the stock price is relatively cheap. The P/S Ratio test says that it is relatively reasonable and so does not confirm the cheap call of the dividend yield tests. The rest of the testing goes from cheap to reasonable and below and above the median.
When I look at analysts’ recommendations, I find Strong Buy (12), Buy (4), Hold (15) and Sell (1). The consensus would be a Buy. The 12 month stock price consensus is $99.90 with a high of $112.00 and low of $81.00. The consensus stock price of $99.90 implies a total return of $6.27% with 3.335 from capital gains and 2.94% from dividends based on a current price of $96.68.
There are few analyst comments on Stock Chase /a> for this stock. One said that performance has not been good for the past 20 years. Prosper Junior Bakiny on Motley Fool thinks that stock is currently a good buy. Reuben Gregg Brewer on Motley Fool says that Medtronic has worked through hardship before and survived. The company put out a Press Release about their fourth quarter ending in April 2025. The company put out a Press Release about their first quarter of 2026 ending in July 2025.
Zacks Equity Research via Yahoo Finance has reviewed this stock and gives it a Hold rating. Simply Wall Street via Yahoo Finance talks about Medtronic’s approval for the Altaviva device. Simply Wall Street has one warning of has a high level of debt.
Medtronic PLC currently generates revenues from four major segments - namely Cardiovascular Portfolio, Medical Surgical Portfolio, Neuroscience Portfolio and Diabetes. Its web site is here Medtronic PLC.
The last stock I wrote about was about was North West Company (TSX-NWC, OTC-NWTUF) ... learn more. The next stock I will write about will be Pason Systems Inc (TSX-PSI, OTC-PSYTF) ... learn more on Monday, October 13, 2025 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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