We recently published a list of the 15 Best Dividend Aristocrat Stocks with Over 3% Yield. In this article, we are going to take a look at where Medtronic plc (NYSE:MDT) stands against other best dividend aristocrats with a high yield.
Dividend Aristocrats are the companies that have raised their payouts for 25 consecutive years or more. Dividends have been an important part of the overall market return for a very long time. According to a report by S&P Global, dividends have represented approximately 31% of the total return of the broader market from 1926 to February 2025, while capital appreciation has accounted for 69%.
Growing dividends consistently highlight the companies’ confidence in their firms’ prospects as market participants see this as a sign of corporate maturity and strong balance sheets. Dividend aristocrats reveal characteristics of both capital growth and dividend income, as opposed to alternative income strategies that mainly pay attention to pure yield or pure capital appreciation.
Investors are more inclined toward dividend growth stocks, and the performance of these equities has also remained stable over the years. According to a report by S&P Global, dividend aristocrats have reported higher returns with lower volatility over the long run as compared to the broader market, which eventually resulted in higher risk-adjusted returns.
In addition to dividend growth, dividend yield is also an important component of total return. The ability to increase dividends does not come at the expense of lower yields; in fact, the dividend aristocrats index has consistently delivered higher yields than its benchmark. The index had dividend yields within the range of 2.0% to 2.8% over the 28-year period, as reported by S&P Global. Moreover, the average dividend yield of the index was 2.5%, compared with a 1.8% dividend yield of the broader market.
As highlighted above, dividend aristocrats have shown lower volatility as compared to the broader market index. Their ability to provide downside protection can be seen in the upside and downside capture ratios. The S&P report highlighted that the dividend aristocrats index has outperformed the market index 66.67% of the time in down months and 43.88% of the time in up months. Notably, the index also has a lower drawdown level compared with the benchmark index. In addition, the dividend aristocrats index provided an average excess return of 0.87% in down months over the broader market. To further emphasize their low volatility, the report mentioned that the dividend aristocrats had a market beta of 0.8 between December 29, 1989, and February 28, 2025.
With the AI boom and tech stocks taking center stage, dividend stocks are somehow overlooked by the market. However, the recent market sell-off has restored their importance, as the Dividend Aristocrats Index has surged by over 2% since the start of 2025, compared with a nearly 5% decline in the broader market. The significance of these equities is much more apparent over long periods of time. According to the S&P Global report, the dividend aristocrats index outperformed its benchmark by an average of 1.59% per year between January 2000 and February 2025. This outperformance was because of the fundamental characteristics of the constituents of the index.
A surgeon in a modern operating room holding advanced medical devices with a sense of purpose and accuracy.
Our Methodology
For this article, we scanned a list of the Dividend Aristocrat index, which tracks the performance of companies that have raised their payouts for 25 consecutive years or more. From that list, we picked 15 stocks with dividend yields above 3%, as of March 29. The stocks are ranked in ascending order of their dividend yields.
At Insider Monkey, we are obsessed with hedge funds. 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Medtronic plc (NYSE:MDT)
Dividend Yield as of March 29: 3.19%
Medtronic plc (NYSE:MDT) is an American-Irish medical device company that operates across various segments, including medical-surgical, neuroscience, cardiovascular, and diabetes. Through these segments, the company offers a wide range of healthcare solutions. In fiscal Q3 2025, it reported a revenue of $8.3 billion, up 2.5% from the same period last year. However, the company missed analysts’ estimates of $8.33 billion. Its GAAP diluted earnings per share (EPS) came in at $1.01, while adjusted EPS grew 7% from the prior year period to $1.39, exceeding analysts’ consensus of $1.35.
In addition to strong earnings, Medtronic plc (NYSE:MDT) also reported a solid cash position, which is crucial to the company’s dividend policy. In the first nine months of the fiscal year, the company generated an operating cash flow of $4.5 billion, and its free cash flow for the period came in at $3.1 billion. With this balance sheet and cash position, it holds a 47-year streak of consistent dividend growth. The company is just three years away from becoming a Dividend King. Currently, it offers a quarterly dividend of $$0.70 per share and has a dividend yield of 3.19%, as of March 29.
At the end of Q4 2024, 67 hedge funds tracked by Insider Monkey held stakes in Medtronic plc (NYSE:MDT), growing from 60 in the previous quarter. These stakes have a total value of over $3.55 billion. With over 9.7 million shares, First Eagle Investment Management was the company’s leading stakeholder in Q4.
Overall, MDT ranks 13th on our list of the best dividend aristocrat stocks. While we acknowledge the potential of MDT as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than MDT but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
