We recently compiled a list of the 10 Best Halal Dividend Stocks To Invest In. In this article, we are going to take a look at where Medtronic plc (NYSE:MDT) stands against the other halal dividend stocks.
Halal stocks are shares in companies that adhere to Shariah law. These companies operate in accordance with Islamic principles, avoiding industries such as alcohol, gambling, tobacco, and non-Islamic finance. They also maintain ethical business practices, ensuring their revenue sources are consistent with Islamic values. The S&P High Yield Dividend Aristocrats Shariah index tracks the performance of Shariah-compliant companies from the Composite 1500 that have a history of consistently raising their dividends for at least 20 years. These companies follow a managed dividend strategy, ensuring steady growth in dividend payouts.
When investing in halal stocks, it’s important for investors to carefully consider a company’s balance sheet. Companies with debt exceeding 33% of their market value are disqualified from halal investing, though this ratio can fluctuate for some businesses. According to a World Bank report, the Islamic finance industry has grown quickly in the last decade, with an annual growth rate of 10-12%. Currently, Sharia-compliant financial assets are valued at approximately $2 trillion, encompassing both bank and non-bank institutions, as well as capital markets, money markets, and insurance.
Also read: 10 Best Diversified Dividend Stocks To Buy Now
Halal investing is still a relatively new concept in the US, where Muslims make up around 1% of the population, as of 2020. In the past, older generations of Muslims typically focused on real estate and physical gold as investments or chose stocks recommended by friends and community members. The complexities of Islamic finance have led many to overlook it. However, this is beginning to change as technology advances and demographic trends shift. Financial educators, along with fintech startups, halal stockpickers, and specialized exchange-traded funds (ETFs), are helping fill the gap. In addition, the rise of zero-fee brokerages has made investing more accessible to Muslims who follow strict financial guidelines. These low-cost platforms have made it easier to serve clients who were previously overlooked or considered unprofitable. Omar Shaikh, director of Islamic Finance Council UK, made the following comment about this:
“Islamic finance as a sector is barely 30 years old, with the past 15 years seeing the most development. It takes time to educate and create awareness and as this has happened, more banks have focused on servicing the demand for halal investing. This in turn helps to create more products, which then creates more demand.”
Halal investing is experiencing growth despite limited awareness. A 2023 report by the General Council for Islamic Banks and Financial Institutions revealed that the global Islamic funds market has expanded by over 300% in the past decade, with nearly $200 billion in assets now managed worldwide. A Goldman Sachs report from December 2022 projected that by 2075, five of the world’s ten largest economies—India, Indonesia, Nigeria, Pakistan, and Egypt—will have Muslim populations exceeding 850 million people.
As the Muslim population grows, so does the demand for financial products tailored to their needs. According to the State of the Global Islamic Economy Report 2023 by DinarStandard, approximately $25.9 billion was invested in Sharia-compliant investments during the 2022-23 financial year, reflecting a 128% increase from the previous year.
Our Methodology:
To compile this list, we chose the top 10 stocks from the S&P High Yield Dividend Aristocrats Shariah Index. These specific companies are known for consistently providing substantial dividends to their shareholders and demonstrating robust financial stability. We ranked these holdings based on the number of hedge funds that had invested in them by the end of Q3 2024, using data from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A surgeon in a modern operating room holding advanced medical devices with a sense of purpose and accuracy.
Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 60
Medtronic plc (NYSE:MDT) is a multinational medical device company that has a diversified business, offering a wide range of devices across four key sectors: medical-surgical, neuroscience, cardiovascular, and diabetes. The stock has surged by over 9.5% since the start of 2025, grabbing investors’ attention. Earlier this year, the company received US approval for its Simplera continuous glucose monitoring (CGM) system. In addition, it formed a partnership with Abbott Laboratories, a leading name in the CGM market. As part of this collaboration, Abbott will provide a CGM system that is compatible with Medtronic’s devices, which Medtronic will distribute exclusively. This partnership highlights the company’s focus on innovation and strengthening its diabetes division.
Medtronic plc (NYSE:MDT) delivered solid earnings in fiscal Q1 2025, reporting $8.4 billion in revenue, a 5.3% increase compared to the same period last year. Diabetes revenue for the quarter reached $686 million, marking a 12.4% year-over-year growth. This growth was driven by a significant rise in international revenue, boosted by increased adoption of CGM devices and the ongoing launch of the Simplera Sync sensor.
Matrix Asset Advisors made the following comment about MDT in its Q3 2024 investor letter:
“In Q3, we added to two Healthcare positions, Medtronic plc (NYSE:MDT) and Becton Dickinson (BD). Both companies are very attractive in our valuation analysis. We started the LCV position in MDT in the second quarter and added to it as more cash became available. The company’s business results have improved this year as the number of medical procedures normalized from their decline during the pandemic. “
Medtronic plc (NYSE:MDT) is one of the best halal dividend stocks on our list because of the company’s solid cash position. In the first half of its fiscal year, the company generated close to $2 billion in operating cash flow, an increase from $1.5 billion during the same period last year. Free cash flow also grew, reaching $1.02 billion compared to $721 million in the previous year. This strong financial position has enabled Medtronic to consistently increase its dividend for 47 consecutive years. Currently, it pays a quarterly dividend of $0.70 per share and has a dividend yield of 3.19%, as of January 22.
The number of hedge funds tracked by Insider Monkey owning stakes in Medtronic plc (NYSE:MDT) grew to 60 in Q3 2024, from 52 in the previous quarter. These stakes are collectively valued at over $4.2 billion.
Overall MDT ranks 5th on our list of the best halal stocks that pay dividends. While we acknowledge the potential for MDT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MDT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
