Welcome to Labour To Leisure. Recently I have held off on making any purchases while we work on adding funds. Most of our cash is tied up in HSUV.U.TO so we can collect some income in the mean time. Recently I came across a company that caught my attention and after doing some due diligence the decision was made to start a new position. That company is:
Medtronic Plc (MDT)
Who is Medtronic Plc:
Medtronic Plc is a leading provider of medical devices. The company was founded in 1949 and is headquartered in Dublin, Ireland. Their portfolio consists of four core sectors which include Cardiovascular 36%, Medical Surgical 29%, Neuroscience 28% and Diabetes 7%.
Company Statistics
- Market Cap: 111 Billion
- Current PE of 25.97
- Forward PE of 15.75
- 5 Year PE average of 34.97
- Dividend Yield of 3.14%
- Payout Ratio of 50.17%
- Dividend Growth streak of 45 years
- 10 Year Dividend Growth Average of 10.3%
Why Medtronic PLC?
It’s no secret that Covid had a huge impact on the economy and MDT felt the pain. I’m sure most if not all of you had someone they know that had some type of medical procedure delayed, some postponed more than 1 year. Prior to pandemic MDT was providing some impressive numbers:
- 2017 Revenue of 29.71B, Earnings of 4.03B or 13.56%
- 2018 Revenue of 29.95B, Earnings of 3.10B or 10.36%
- 2019 Revenue of 30.56B, Earnings of 4.63B or 15.16%
Prior to the pandemic MDT was trading at a high of $115.44 before dropping down to $90.18. Obviously investors could see what was about to happen and fear started to kick in. MDT felt the pain but not as bad as the stock price would indicate:
- 2020 Revenue of 28.91B, Earnings of 4.79B or 16.56%
- 2021 Revenue of 30.12B, Earnings of 3.61B or 11.97%
- 2022 Revenue of 31.69B, Earnings of 5.04B or 15.90%
What’s interesting to me is MDT is now performing better than 2019 and is currently trading 35% down from its high in August of 2021 ($133.48). Now I’m not saying that in August 2021 it wasn’t a bit inflated but with recent earnings and Covid behind us I could really see MDT get back to a better valuation.
With the 3 year Compound Annual Growth Rate forecast of 8%/year, Double Digit Dividend Growth over 20 years, a payout ratio of 50.17% I felt very comfortable adding it here. There is really no reason to not think that this stock can go higher than its high in 2019 and at the same time continue to increase the Dividend by at least 7-10% annually.
I’d really like to hear what you think, so feel free to leave a comment.
Invest In Yourself
Brian
Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. Please ensure you do your own research.
