Recent Sell – Medtronic plc

Well, this was an unplanned sale and I was hoping to resolve this issue without having to sell the company. Normally, I firmly believe that investors should only invest in companies if they want to hold it forever. Renting stocks for the short run, looking for capital gains isnt the best way to invest and it has been demonstrated time and again, that traders get burned while trying to time the market. While this transaction of selling my position was not to lock in capital gains and trying to time the market, the resulting byproduct sure does seem that way. This transaction was mainly influenced to make my life easier over the course of years concerning dividend taxes.

After a few back-and-forth emails with my discount broker, I decided to sell my position in Medtronic plc (MDT). There is nothing really wrong with the company – and I really like the long term prospects. Medtronic is definitely one of the best run companies when it comes to medical devices and the cardiac/vascular group. Read my post from Sep 2013 when I initiated the position. The facts and the reasoning behind owning still stands – if you are interested in investing in this great company.

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Medtronic Inc (MDT) Dividend Increase

Medtronic Inc (MDT) announced that its quarterly dividend will be raised by 9% from $0.28 per share to $0.305 per share. This dividend increase is the company’s 37th consecutive annual increase. The new dividend is scheduled to be paid on Jul 25, 2014 to shareholders on record as of Jul 3, 2014. The new dividend rate results in an annualized yield of 2.05% based on MDT’s current stock price.

 

My portfolio consists of 25 shares of Medtronic Inc, which increases my annual dividend raise from $28 to $30.50. My yield-on-cost is 2.30%.

Recent Buy – Medtronic Inc (MDT)

I initiated a new position in Medtronic, Inc. (MDT). Medtronic is a S&P 500 component, which manufactures and sells device-based medical therapies worldwide.
The company operates in two segments, Cardiac and Vascular Group, and Restorative Therapies Group. The Cardiac and Vascular Group’s products include pacemakers; implantable defibrillators; leads and delivery systems; ablation products; electrophysiology catheters; products for the treatment of atrial fibrillation; information systems for the management of patients with cardiac rhythm disease management (CRDM) devices; coronary and peripheral stents and related delivery systems; therapies for uncontrolled hypertension; endovascular stent graft systems; heart valve replacement technologies; cardiac tissue ablation systems; and open heart and coronary bypass grafting surgical products. The Restorative Therapies Group offers products for various areas of the spine; bone graft substitutes; biologic products; trauma, implantable neurostimulation therapies, and drug delivery devices for the treatment of chronic pain, movement disorders, obsessive-compulsive disorder (OCD), overactive bladder, urinary retention, and fecal incontinence and gastroparesis; external insulin pumps; subcutaneous CGM systems; products to treat conditions of the ear, nose, and throat; and devices that incorporate advanced energy technology. It also manufactures and sells image-guided surgery and intra-operative imaging systems; and provides Web-based therapy management software solutions. The company serves hospitals, physicians, clinicians, and patients in approximately 140 countries. Medtronic, Inc. was founded in 1949 and is headquartered in Minneapolis, Minnesota.

Recent Buy Decision

My healthcare mutual fund is the only exposure that I have to the healthcare sector and I have been meaning to expand my exposure in the healthcare sector with individual stocks in my steps towards liquefying my mutual fund position. As part of the process, I intend to get exposure to medical devices equipment manufacturers, healthcare REITs (last month, I bought Omega Healthcare), pharmaceutical companies, biotech stocks etc. Medtronic fills the void for the medical devices equipment manufacturer.
Medtronic Inc is a dividend champion that has been increasing dividends for 36 years with a 5-yr dividend growth rate (DGR) of 16.50% and 10-yr DGR of 15.50%. The stock currently yields approximately 2.1% and a payout ratio of 32% with plenty of upside potential.
The stock The stock has a 5-yr average yield of 3.30% and currently yields 3.37% with a payout ratio of 29.8% and plenty of room to increase dividends.
A summary of the stock:
  • Symbol: NYSE: MDT
  • Quote: $52.81
  • 52-week Range: $40.28-$55.98
  • P/E: 15.19
  • P/B: 2.91
  • Yield: 2.12%
  • 5-yr DGR: 16.50%
  • 10-yr DGR: 15.50%
  • Payout Ratio: 32.18%
  • Debt to Equity Ratio: 0.60
  • Book Value per Share: 18.34
  • Graham Number: 37.89
 
Disclaimer: The information provided here is for educational purposes only. All opinions here are my personal opinions and should not be taken as financial advice. I am not qualified to be a financial advisor. Always consult with your financial advisor before investing in any of the companies mentioned on this blog.