I want to tell you about a high-quality stock that pays big, growing, reliable dividends. These growing dividends are funded by growing profit, because this business is providing life-saving and life-improving medical devices. Healthcare is in secular growth mode. With the world gaining population, and with people living longer than ever, that's just a fact. This bodes well for healthcare companies in general. But it bodes especially well for companies, like this one, that are involved in the more non-discretionary side of healthcare. That means growing profits... and growing dividends. Medtronic PLC (MDT) is a global developer and manufacturer of medical devices for chronic diseases. Founded in 1949, Medtronic is now a $157 billion (by market cap) healthcare giant that employs 90,000 people.

The company reports results across four segments: Cardiovascular, 36% of FY 2021 revenue; Medical Surgical, 29%; Neuroscience, 27%; and Diabetes, 8%. Their product portfolio includes implantable defibrillators, heart valves, insulin pumps, pacemakers, stents, and surgical tools. Medtronic is in the business of providing healthcare that saves and/or improves lives. And they’re a leader in doing so. From Morningstar: “Medtronic has historically held roughly 50% share in its core heart devices. It’s also the market leader in spinal products, insulin pumps, and neuromodulators for chronic pain.” What’s appealing about Medtronic from an investor’s point of view is the secular growth of healthcare in general, as well as the non-discretionary nature of this kind of healthcare specifically. With the world growing larger, older, and wealthier, you naturally end up with a bigger pool of people who need, and can financially access, quality healthcare options. That’s the secular growth story. In addition, these products specifically aren’t a discretionary expenditure in most cases. If, for instance, you need heart surgery, this is not something you’re going to negotiate or delay. You get a level of certainty here in terms of the business model. And that translates to a level of certain growth in profits and certain growth in dividends. Already, Medtronic has increased its dividend for 44 consecutive years. This is a vaunted Dividend Aristocrat, which is reserved for stocks with at least 25 consecutive years of dividend increases.

The 10-year dividend growth rate is 10.0%. And that double-digit dividend growth is paired with a starting yield of 2.2%. That is well ahead of what the broader market offers in terms of yield. This is also slightly higher than the stock’s own five-year average yield. With a low payout ratio of 44.2%, based on midpoint guidance for this fiscal year’s adjusted EPS, the dividend is secure and positioned to continue growing. One might wish to see a higher yield, but the dividend growth rate makes this an excellent long-term compounder. CFRA rates MDT as a 4-star “BUY”, with a 12-month target price of $134.00. I came out low this time around. Averaging the three numbers out gives us a final valuation of $123.79, which would indicate the stock is possibly 9% undervalued.

Bottom line: Medtronic PLC (MDT) is a high-quality company that enjoys incredible market share and secular growth in its industry. With a market-beating yield, double-digit long-term dividend growth, a low payout ratio, more than 40 consecutive years of dividend increases, and the potential that shares are 9% undervalued, this is a Dividend Aristocrat that all long-term dividend growth investors should seriously consider for investment right now. How safe is MDT’s dividend? We ran the stock through Simply Safe Dividends, and as we go to press, its Dividend Safety Score is 99. Dividend Safety Scores range from 0 to 100. A score of 50 is average, 75 or higher is excellent, and 25 or lower is weak. With this in mind, MDT’s dividend appears Very Safe with a very unlikely risk of being cut.

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