Comparison: Medtronic and Walgreens Boots Alliance, Which is the Superior Dividend Stock to Invest in Today

Comparison: Medtronic and Walgreens Boots Alliance, Which is the Superior Dividend Stock to Invest in Today

If you’re an everyday investor looking for stocks that can deliver consistently rising dividends over long periods of time, the healthcare sector is a good place to start your search. People get sick just as often during economic downturns as when businesses are booming.

Medtronic (NYSE:MDT) And Walgreens Boot Alliance (NASDAQ:WBA) are two payment of dividends giants of the health sector. Both offer much more attractive returns than the paltry 1.4% return you can receive from the average stock in the benchmark index. S&P500 hint.

Here’s a closer look at their recent performance to see which one is most likely to deliver consistently growing payouts in the years to come.

The case of Medtronic

Medtronic’s focus on developing new medical technologies has served its shareholders well. The company has been able to increase its quarterly dividend for 46 consecutive years. The stock offers a yield of 3.2% at recent prices.

Medtronic dividend payment has grown 146% over the past 10 years, but that pace has slowed. Payouts have only increased 9.5% over the past three years.

Comparison: Medtronic and Walgreens Boots Alliance, Which is the Superior Dividend Stock to Invest in Today

MDT Dividend Chart

Many devices sold by Medtronic, such as pacemakers and spinal stimulators, are only implanted in patients after clearing numerous medical hurdles. The COVID-19 pandemic has put a damper on the company’s gears, but investors will be happy to know that total sales are up 7% over the past three years.

Medtronic’s sales and profits are likely to continue moving in the right direction. The company’s product range has expanded significantly in recent months. During its fiscal third quarter ended January 26, the Food and Drug Administration (FDA) approved the company’s new pulsed field ablation system and a new neurostimulator. Most recently, the FDA approved the company’s new aortic valve replacement system.

The case of Walgreens Boots Alliance

The past few years have been difficult for Walgreens Boots Alliance shareholders. In a nutshell, the company’s attempt to become more than just a retail pharmacy chain isn’t working. As a result, it cut its dividend by 48% this year. At recent prices, the stock offers a yield of 4.6%.

Investors who follow Walgreens closely will remember that the company had planned to launch 1,000 primary care practices in partnership with VillageMD, a joint venture partly owned by Cigna. Walgreens has invested billions in VillageMD but has only losses to show for it. During Walgreens’ fiscal second quarter that ended Feb. 29, the partners wrote down VillageMD’s value by $12.4 billion.

WBA Dividend ChartWBA Dividend Chart

WBA Dividend Chart

Walgreens’ share of VillageMD’s latest impairment charge totaled $5.8 billion and led to a reported net loss of $5.9 billion in its fiscal second quarter. Even after adjusting for non-cash impairment charges, the company reported second-quarter operating profit that fell 26.5% year-over-year to just $900 million.

Retail pharmacies are increasingly subject to the whims of pharmacy benefit managers, or PBMs, who essentially determine how much they receive for dispensing prescription drugs. Without a clean PBM, it’s hard to imagine how Walgreens will be able to grow its bottom line in the years to come.

The Best Dividend Stock to Buy Now

Walgreens offers a higher yield, but shrinking profit margins in the retail pharmacy industry could make growing its bottom line and dividend payments nearly impossible over the long term.

Medtronic isn’t growing as fast as it used to, but developing new medical technologies is a more lucrative business than the struggling retail pharmacy sector. With its streak of dividend hikes still intact and many newly approved products on the market, Medtronic appears to be a much better dividend stock to buy.

Should you invest $1,000 in Medtronic right now?

Before buying Medtronic stock, consider this:

THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and Medtronic was not one of them. The 10 selected stocks could produce monster returns in the years to come.

Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor The service has more than tripled the performance of the S&P 500 since 2002*.

See the 10 values

*Stock Advisor returns March 25, 2024

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool recommends Medtronic. The Motley Fool has a disclosure policy.

Better Dividend Stocks to Buy Now: Medtronic vs. Walgreens Boots Alliance was originally published by The Motley Fool

Source Reference

Latest stories