Key Points
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Over time, Medtronic’s business got bloated, and growth slowed.
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The medical device giant overhauled its business and is starting to see stronger results.
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Wall Street doesn’t seem to care about Medtonic’s business upturn.
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Wall Street is a fickle place, with investor emotions often shifting quickly. But sometimes, somewhat ironically, investor opinions are stubbornly hard to change. That’s likely what’s behind Jim Cramer’s description of Medtronic (NYSE: MDT) as a “quandary.” Here’s the backstory and why long-term dividend investors may want to reevaluate their opinion of this medical device giant right now.
Medtronic’s fate wasn’t shocking
Medtronic is an industry-leading medical device maker, with a market cap of roughly $115 billion. A few years ago, the company’s growth slowed to a crawl, and a bloated business made decision-making more difficult. This type of thing happens to large companies over time. Investors sold the stock in favor of more nimble businesses. From its 2021 high to its 2023 low, Medtonic’s stock lost nearly half of its value.
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However, the company didn’t stick its head in the sand and hope for the best. It began revamping its business by selling assets, investing in technology, and streamlining operations. The goal was pretty simple: focus on its highest growth and most profitable businesses to get the company growing again. The improvements are starting to take shape.
In fiscal 2026, Medtronic delivered its highest annual revenue growth in 10 years. It has new products coming online, including a surgical robot, that offer material long-term growth opportunities. And the dividend is still growing, with the company just one year away from Dividend King status despite the weak patch. Add in a well-above-market 3.1% dividend yield, and you can see why dividend investors would want to look into Medtronic today.
Wall Street isn’t giving Medtronic much credit
Jim Cramer’s description of Medtronic as a quandary likely reflects that, despite improved results, the stock is still down 30% from its 2021 high. Its price-to-sales and price-to-earnings ratios are both below their five-year averages. Even after reporting strong fiscal first-quarter 2027 results, including nearly 14% revenue growth and a guidance raise after just a single quarter, Wall Street seems to still be stuck in a “show me” mood.
That said, it looks like the company is already showing that it has turned a corner, but investors are not giving it any credit for the improvement. So, if you are a dividend lover, you might want to get to know Medtronic now, before Wall Street changes its mind. While investors can be poor judges of value over short periods, they tend to get things right over long periods. Taking advantage of “quandaries” like Medtronic can both increase the income you generate and lead to attractive long-term capital growth.
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Reuben Gregg Brewer has positions in Medtronic. The Motley Fool has positions in and recommends Medtronic. The Motley Fool has a disclosure policy.
