Week #2MDT
Stock of the Week #2 — Medtronic (MDT)
88Five-box test: ✓ Pays · ✓ Raises · ✓ Safe · ✓ Undervalued · ✓ Yield that matters
Week two, and we're staying disciplined: another $100, another company that passes the five-box test, in the same real account, shown in full.
This week we're buying something very different from week one. Tractor Supply sells feed and fence posts to rural America. Medtronic (MDT) makes pacemakers, insulin pumps, surgical tools, and the spinal and heart-valve technology that keeps people alive. On purpose, the two have almost nothing to do with each other, and that's the point.
Why Medtronic
Medtronic is one of the largest medical-device companies in the world. Its products sit inside hospitals and inside people, and demand for them doesn't rise and fall with the economy the way a hardware-store trip does. When money gets tight, families cut back on a lot of things, but they don't skip the pacemaker. That steadiness is exactly what we want sitting next to a cyclical name like Tractor Supply. If one corner of the portfolio is having a rough year, the other probably isn't, for completely unrelated reasons. That's how a family portfolio gets sturdier over time.
It's also a 48-year dividend raiser, a Dividend Aristocrat that has increased its payout through every recession, war, and market panic since 1978.
The five boxes
- Pays — yes, 48 straight years without a cut.
- Raises — 48 consecutive years of increases.
- Safe — a payout around 77% of earnings. Sustainable, with the cash flow to keep paying.
- Undervalued — the yield sits about 15% above its own five-year norm, a sign the shares are cheaper than usual.
- Yield that matters — about 3.6%, real income, comfortably above the broad market.
Five boxes, five checks. That earns Medtronic a DividendAbundance Score of 88 — Strong (the badge is on this page; the full method is on How this works).
The honest part
We promised to show you the asterisks, not hide them, so here's Medtronic's. Of the five boxes, the one we'd flag is growth: its most recent raise was tiny, around 1.4%, barely ahead of inflation. Medtronic today behaves less like a fast dividend grower and more like a reliable, high-yield payer. We're buying it with eyes open for what it is: the steady, defensive anchor of the portfolio, not the engine of fast-rising income. Tractor Supply can do more of that work. Medtronic's job is to keep paying, and raising, no matter what the economy throws at us.
There's also a cloud over the stock, which is why the yield is this generous in the first place. Growth has been slow, and the market has been impatient with the turnaround. We're buy-and-hold-forever investors, so a patient market handing us a 48-year Aristocrat at a multi-year-high yield looks less like a problem and more like an opportunity.
The numbers on this week's $100
- Invested: $100.00
- Bought: 1.2616 shares at $79.26
- New annual dividend income added: about $3.63 per year
- Every dividend Medtronic pays is automatically reinvested into more Medtronic (DRIP), so the share count and the income climb on their own between our weekly buys.
Two weeks in, two very different businesses, one growing income stream. The running totals are on the portfolio page, and the home-page slider lets you drag through time and watch the income compound.
That's week two. We bought MDT, we're holding it, and we'll see you next week with pick number three.
This is not financial advice. We're individual investors sharing our own approach and the reasoning behind our own real decisions, not licensed advisors. We own, or are buying, the stocks we write about in this series. Do your own research and consider speaking with a financial professional before investing. Dividend figures, yields, share counts, and prices are accurate to the best of our knowledge as of the publish date and will change over time.