The Unlikely Triumph of Medtronic: A Five-Year Tale of Slight Gain and Steady Dividends

Ah, five years ago! What were you doing, dear reader? Perhaps dabbling in the complexities of work-from-home life, soaking in Shakira and J.Lo’s halftime Super Bowl extravaganza, or—let’s not pretend—considering the whims of the stock market. Now, let’s say you threw $1,000 into the lively waters of Medtronic (MDT), that trusted behemoth of medical devices. One might have expected a windfall, or at least a modest, dignified return. Alas, the outcome is modest indeed: your $1,000 investment would have grown to a mere $1,065. A gain, yes, but hardly the stuff of legend. It’s akin to buying a chicken expecting it to lay golden eggs, only for it to leave you a single egg—at least it’s an egg.

Had you opted instead for the humble S&P 500 index fund, the picture would be rather different. That same $1,000 would have swollen to $2,034—a dazzling, almost miraculous doubling in just five years. Imagine the splendor of that investment at the end of a half-decade: a neat little sum of well-earned money, rather than a sad, drooping chicken egg.

Now, what has happened to Medtronic in the interim? My ever-wise colleague, Reuben Gregg Brewer, suggests that Medtronic’s malaise lies in its ponderous and bloated business portfolio, a veritable whale of excess. The company has, in the manner of a tired dragon, begun shedding its scales—strategic divestitures, reorganizations, a dance of corporate reformation. In other words, Medtronic seems to have discovered the business equivalent of a diet: trimming down and simplifying, though one might argue, it’s a bit late for such epiphanies.

But let us not be too hasty in writing off Medtronic. For all its apparent languor, it has its merits—chief among them, the dividend. Yes, this is a company that has grown a certain fondness for paying its investors to keep the faith. With a current dividend yield of 3.15%, it generously rewards those willing to wait patiently. Even more delightful is its tradition of increasing this payout by an average of 5.3% per annum over the last five years. A 48-year streak of dividend hikes? It’s almost as if Medtronic is trying to remind us that it still knows how to treat its shareholders, even if it can’t quite manage to take off like a rocket.

Perhaps the most intriguing facet of Medtronic’s future is its flirtation with artificial intelligence. Yes, indeed, the future is now, and Medtronic is busy weaving AI into its medical devices. The company’s endoscopy equipment, for example, now boasts AI capabilities to detect polyps—this sounds more like the plot of a cyberpunk novel than the operations of a staid medical firm, but there we have it. AI is everywhere, even in places you wouldn’t expect, and Medtronic seems eager to join the AI revolution, albeit a bit late.

And lo! The company is growing—at least, in a modest, small-batch way. It reported $8.9 billion in revenue for its fourth quarter, a 4% increase, and a 16% year-over-year increase in operating profit for fiscal 2025. One might say that Medtronic has found its stride—or at least, stumbled upon it.

Is it time to take a serious look at Medtronic’s stock? Perhaps. With a forward price-to-earnings (P/E) ratio of 16, it’s below its five-year average of 17, presenting itself as a potentially reasonable buy for those seeking a blend of growth and income. But, as any seasoned market skeptic might say, tread carefully. When you buy stock in a company, you’re not just purchasing shares—you’re purchasing a narrative. And this one, while not entirely unappealing, still reads like a story of missed opportunities and slow, incremental progress.

So, if you’re in the mood for growth, patience, and a dividend that rewards those who can wait, Medtronic may yet make a worthy addition to your portfolio. But remember, in the stock market, as in life, it’s not always about the destination—it’s about how you got there.

And with that, dear reader, may your investments be wiser than your stock choices in the past. 🧐

2025-08-05 05:10

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