Medtronic, Inc. (MDT): Is This Stock in Your Portfolio? If Not, Then Consider Getting Some

And then, there’s the risk of competition. While Medtronic has successfully gained the CE Mark for CoreValve in Europe, the company would be up against the likes of Boston Scientific Corporation (NYSE:BSX). Boston Scientific’s aortic valve, Lotus, looks like a worthy competitor as it was implanted safely and didn’t result in many complications.

According to the findings of the study, the device can improve the flow of blood through the repaired aortic valve and doesn’t require a by-pass surgery. According to Bloomberg, industry experts expect Boston Scientific Corporation (NYSE:BSX) to receive the CE mark for this device later this year and once this happens, there will be one more contender in the market.

Ample compensation

However, for all this risk, the company compensates its shareholders handsomely through a solid dividend and share repurchases. Medtronic, Inc. (NYSE:MDT) has raised its dividend for 36 years on the trot, and after the most recent increase, the dividend yield sits at an impressive 2.20%.

The company is focused on returning half of its free cash flow to shareholders and given the fact that it is a free cash flow generating machine, investors can expect the dividend to rise further as the payout ratio is just 31%. It also enhanced its repurchase program late last month.

The bottom line

No company is perfect, and nor is Medtronic, Inc. (NYSE:MDT). But, it ticks most of the right boxes. Its diversification, research and development, and new product introductions should help it get better in the future, while a solid strategy of returning cash to shareholders is an icing on the cake. Despite a terrific rise in price this year, the stock is still decently valued with a trailing P/E of 15.5 times, well below the industry average of 22.

Considering all these factors, Medtronic is still a good buy.

Harsh Chauhan has no position in any stocks mentioned. The Motley Fool owns shares of Medtronic. Harsh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Is This Stock in Your Portfolio? If Not, Then Consider Getting Some originally appeared on Fool.com and is written by Harsh Chauhan.

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