Medtronic shares have fallen more than 7% in 2026, pushing the medical device maker's dividend yield to 3.2% even after a strong fiscal first-quarter report. The company raised its full-year guidance, keeps making targeted acquisitions, and is still absorbing costs from spinning off its diabetes unit.
Medtronic shares are down more than 7% so far in 2026 and off more than 32% over the past five years. The stock slid another 3% since Medtronic's fiscal 2027 first-quarter report on Sept. 1, even though the results themselves were strong.
Falling shares push the dividend yield higher
The decline has a silver lining for income-focused buyers. Medtronic's dividend yield has climbed to 3.2%, slightly more than three times the average yield on the S&P 500. As free cash flow improved, the company's payout ratio dropped to around 59%, leaving room for further increases. Medtronic has raised its payout for 49 consecutive years, putting it one year from joining the Dividend Kings, and lifted the dividend 1.4% this year.
Still, there are reasons for caution. Medtronic is working through expenses tied to spinning off MiniMed, its diabetes care business, earlier this year. It has also spent heavily to build out its Hugo RAS robotic surgery unit against rival Intuitive Surgical, while its neuroscience segment faces slower growth from pricing pressure and competition from Globus Medical and Stryker.
Quarterly results beat expectations
Medtronic booked fiscal 2027 first-quarter revenue of nearly $9.8 billion, up 13.7% year over year, though an extra week in the period added about $570 million to organic growth. Earnings per share rose 40.7% to $1.14. Cardiovascular revenue grew 18.9% organically to $3.93 billion, with cardiac ablation solutions jumping 88%, while neuroscience grew 9.3% and medical-surgical rose 10.2%.
As a result, Medtronic raised its full-year organic revenue growth forecast to a range of 7.25% to 7.75%, up from 6.75% to 7.25%, and lifted the low end of its non-GAAP diluted EPS guidance to $5.94 from $5.90.
Targeted deals fill out the pipeline
Rather than pursue large mergers, Medtronic has focused on smaller acquisitions that plug into its existing distribution network. Earlier this year it exercised an option to acquire CathWorks and its AI-powered 7FFR 3D diagnostic platform. In June, it bought Salt Lake City-based Scientia Vascular for $550 million, a maker of micro-guidewires for stroke procedures. In July, it added SPR Therapeutics for $650 million, gaining the FDA-cleared Spring Peripheral Nerve Stimulation System for chronic and acute pain.
The stock trades at a lower valuation than most of its competitors, and Fool.com's James Halley writes that Medtronic's above-average dividend gives long-term investors a cushion while they wait for the stock's valuation to recover.
Source: The Motley Fool
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