Medtronic is the world’s largest medical device company with a market capitalization of US. $148 billion. It gets 60% of its sales and profits outside North America.
Medtronic’s latest quarterly earnings released Nov. 19, 2019 beat analyst expectations. The bottom line was boosted by strong performance in its unit that makes surgical instruments, including pacemakers.
Medtronic has been beefing up this part of its operations through acquisitions. In May, it bought Titan Spine Inc., a company that makes titanium spacers that are inserted between the vertebrae during spinal fusion surgery. The purchase complements an acquisition of Mazor Robotics at the end of 2018. Mazor is a specialist in robot-assisted spinal surgery. This type of surgery is a less invasive and more precise alternative to traditional open spine surgery.
Medtronic is also a dividend leader. It raised its dividend with the July payment for the 42nd year in a row. The new rate yields 1.95% at current prices.
A recent Barron’s article noted that Medtronic’s Micra pacemaker which provides pacing to a single heart chamber, can be made to treat a dual-chamber condition. Medtronic is applying for approval to do so. If it gets a go ahead it would mean sales to a much larger market.
The article said that success with Micra is an illustration of momentum at Medtronic, including a shift to faster growth and a 14-quarter string of positive earnings surprises. Medtronic continues to benefit from the trends of first world aging and emerging market growth. These tailwinds are raising sales and profits to offer investors rising dividends, safety and growth.
Medtronic is a top holding of the Harvest Healthcare Leaders Income ETF (HHL-TSX, HHL.U-TSX). As of Oct. 31, 2019, the ETF held 20 of the largest global healthcare companies with an average market capitalization of $169 billion CAD.
About 44 per cent of the ETF’s portfolio holdings are in pharmaceuticals, 19 per cent in biotechnology, 19% in healthcare equipment and supplies and 15 per cent are healthcare providers.
The holdings have an average dividend yield of 1.97% and a current distribution yield of 9.15% which is enhanced by Harvest’s covered call strategy. The ETF’s portfolio holdings also have a 5-year return on equity of 18.34% and the ETF has a management fee of 0.85%.
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The views and/or opinions expressed in the blog are of a general nature and are for informational purposes only. Blog contents should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage in personal investment strategies. Investors should consult their investment advisor before making any investment decision.