Blue-Chip Dividend Growth Stock Rarely In Value: Double-Digit Dividend Growth | FAST Graphs

Medtronic PLC is one of the world's leading medical device manufacturers based in Ireland. This quintessential

dividend

growth

stock

has increased its

dividend

s for 45 consecutive years. Its A rating is very modest with equity of just 23 percent and it again has an impeccable dividend history. As you can see in the quick chart here, where they have increased their dividends each year and are expected to continue doing so in the future, as I will talk about dividend coverage here later, it is a classic discussion assessment because the market

rarely

gives you gives an opportunity to buy these

stock

s with an attractive valuation.

This Orange Line represents a ratio of 15, which would be attractive after the Great Recession. We had a few years where we were able to buy them below that and these were great times to buy Medtronic. but now we have a good time to buy Medtronic, foreign co-founder of Fast Grass, the fundamentals analyzer software tool, and today I am going to look at the dividend

growth

stock of Medtronic, it is a stock that I have admired for a long time. I've probably been invested in and out of this stock for over three decades now and it's very, very difficult to find a stock and an attractive valuation, but it's already there, so I thought it would be a good time to look at it.

I'm not necessarily saying it should be bought today, but I think today would be a good time to buy it if you were a long-term investor and willing to add more capital to the stock if it fell. I think the future is very, very bright and I'll get into all of that and more, but one thing I want to talk about is I'm going to do my typical analysis out loud by numbers video here and look at all the different ways I can look at Medtronic looking at quick charts with all the different metrics that they offer and the financials that we can analyze, etc., but I'm also going to emphasize a little bit how I would investigate the dogs deeper and

fast

er.

The idea of ​​using a quick chart is so you can determine when it would be appropriate to investigate a stock deeper and

fast

er. It's one of the most powerful research tools I know, of course, I invented it so I'm biased, but the bottom line is. I think you know it's the first step; You should always start by looking at the history of the company and its financials, but you can't stop there, you need to go further as there is no substitute for thorough research and due diligence. So I'm going to talk about how I do that as well, but let's go ahead and look at Medtronic, the company, and also at me as Mr.

Evaluation. I want to add a couple of things about the valuation. I've used this analogy several times in other videos and such. I want you to realize the high valuation that the market was giving to Medtronic. This is right when we were going through the irrational and exuberant period of 1990 7 8 9 2000 2001, as you can see, I go back to 2003. on this chart, but Medtronic was still very over

value

d and I want you to notice how the price moved quite a bit sideways, you know, throughout 2008 it was still trading in the high 40s and low 50s range and then, of course, the recession brought it in and reset it to a very attractive valuation, it got to fair

value

, it passed for that and then, you know, he tried to bounce back a couple of times, but he remained underrated for several years.

These were clearly the best times to buy the stock and then it sort of went back to normal. High valuation the market likes to apply to this very high-quality, A-rated dividend growth stock that currently offers a yield of 3.28 percent. Now you can also look at dividend yields. This is one of the best dividend yields you know you've been able to buy this stock usually you know it's very difficult just through this early 2010 11 12 here when it was really high could you have bought it with a dividend yield much higher than two and one? half a percent or so now you can buy it at a dividend yield of three point two eight percent, so I would say that's very, very attractive for this company and I'll talk later in the video about how fast this dividend has been growing, but This is what I really want you to notice.

I'm going to use my scroll bar feature here and scroll back to where the company was growing at

double

-

digit

rates, about 10 percent annually, and what I want you to see. This is if you had bought the stock here when it was trading at a PE of 36. I didn't hit a top here, but I also didn't hit a bottom and you held this stock until the end. Great Recession for all those years, you would have averaged about four percent annually if you had held out during the Great Recession for all these years you are ready to come back, you would have come to minus 5.2 percent annualized to turn an investment of ten thousand dollars at 6300, but this is what I want to point out during that time period.

I'm going to use the scroll bars here a little more so you can really get a good perspective. The companies' profits grew wonderfully during this period of time. growing at more than 13 percent a year and yet if you had bought the stocks during this time period, you know when they were highly valued by the market and held them going into the recession again, not deep down, you would have lost money holding the shares. stock for this six or seven year period here, whatever it is, you can count it, so the point is that valuation matters and it is very important, the only thing that was wrong with the company during this period of time, the reason why it didn't turn investors into A lot of money was overvalued now, it continued to increase its dividends every year as it has for 45 consecutive years and if you're not very familiar with this company, it's one of the gadget companies largest physicians developing therapeutic products. medical devices for chronic diseases, includes things like pacemakers, defibrillators, heart valves, stents, insulin pumps, spinal fixation devices, neurovascular products and surgical tools, etc., so this is really a medical device that you know and one of the main companies, it is in the same line as companies like Other Premier companies are Abbott Johnson and Johnson, which of course is a Triple A and Striker rated company, but I want you to know that Medtronic is one of the highest quality , it is rated, so it has good quality, it has one of the lowest net ratios, but it is the only one that offers an earnings yield of more than six and a half percent, which is what you know, my minimum threshold for investing and then as far as looking at it from a dividend yield standpoint, we'll move on to this call here.

I'll put it in order from highest to lowest. You can see that it also offers the highest current dividend yield of any of these device manufacturers and these device manufacturers are generally good companies. You'll know you've seen Johnson and Johnson again in the past. the problem is you know they're overrated you know here's Johnson and Johnson Johnson and Johnson are moderately overrated of course Medtronica is undervalued and Striker. I would consider Motley to be overrated. Notice that all these companies have good growth, some of them are growing faster than Medtronic, but the bottom line is that this is a premium company, the market puts a premium valuation on it and now it has come down to a reasonable value.

By the way, there are a few reasons for that. Please note that during Covid we had a sudden drop. You know the company had two years of negative earnings growth during that time, but notice also that they still increased their dividends in a few moments and then the stock recovered and became excessively overvalued with a 25 percent earnings increase. Their fiscal year is April, so we're actually in fiscal year 2023 right now to be clear, and by the way, as a side note, they're announcing earnings a week from today, next Tuesday. They made an announcement today stating that their earnings report will be released next Tuesday, November 22nd.

One of the questions you have here is whether you should buy the stock before earnings or should you buy it after earnings. Now you know I'm going to get into the forecast account calculators. Analysts are waiting for the report on the first call. about four and a half percent growth over the next two to three years, as you can see, we expect April 2023 to have a real negative growth rate. Earnings are expected to fall from 555 to 553, but are then expected to recover by six. percent and seven percent the following year, the long-term growth according to this group of analysts is eight percent and this is a trend line growth rate that I am showing now.

I never stop here. I go to my external links, this is where it speeds up. The chart facilitates further investigation and due diligence process. I can access external links and we're going to add external links to this all the time, but the first thing I do when I look at the earnings estimates when I go on Yahoo they get their data from Reuters and you know we're showing 553 and 585 for this year and the next year again, once again quick charts are showing, let me check the estimates tab, quick charts are showing 553 on 587 7, so those numbers are close to you.

I know 553,555, but one of the big differences here is that the growth rate for the next five years according to the analyst who reported to Reuters is 12.66 percent, so I want to make a point here when I look at these growth rates , I have an eight percent growth rate here and that would give me

double

-

digit

rates of return if the company you know grew its earnings to around eight dollars and 80 to 90 cents or let's say closer to nine dollars, but If I use the custom Calculator: I'll round it to 12.5 percent to simplify it and put the growth rate at twelve and a half percent.

Reuters analysts believe my rate of return could rise to 16.4 percent, so I have a potential rate. yield according to these analysts of between 11 and 15 percent, which seems pretty attractive if those numbers are close to being realistic, so what I'm looking for now is more information, so I would go on other sites here, go to Morningstar and try for Morning Stars to take on the company. What do you think of Medtronic today? They are giving Medtronic a five star rating. They talk about the fact that they had disappointing test data. a blood pressure treatment they were doing at the critical kidney generation called Medtronic was disappointing and they had disappointing data, so they point that out and maybe that's part of the reason the stock is so cheap now, but the company also talks about you know their business strategy in Outlook, they say they are positioning themselves as the largest Pure Play medical device manufacturer and they are still a force to be reckoned with and that is true and I will talk more about that in a minute.

They also appreciate Medtronic's diverse portfolio and say it is a wide moat, they give it a wide moat rating, which is very good and is based on its dominance in highly engineered medical devices to treat chronic diseases, including those more beyond their historical stronghold on heart disease, which they're really known for for their defibrillators and pacemakers etc. is where they really cut their teeth, so I would go into this and look at, you know, the fair value and earnings drivers . I would analyze the actions through which I also subscribed to zax. I'll jump into Zach's investment research and do it. in your analyst report and you know I'm not always as interested in opinion as I am in facts so I'm looking for facts here and you know you are strategically expanding your global presence to address the unmet need for advanced medical technologies. go ahead and give an overview of the company and talk about what it does, talk about cardiovascular revenue or more, you know, 6.3 percent, the revenue from the medical surgery portfolio also performed well, including all of these divisions Gastrointestinal and renal problems, which increased by approximately five percent, also give rise to breakdowns. of what the different sections of the company are, you can look at some of their forecasts of what the growth is and again, I just want you to see the process here, but you would have to do all this work yourself, you know or on your own. but I think it is very important.

I go on sites like Looking for Alpha. You would get a current quote. Remember, they're going to report earnings a week from today, so that's something to keep in mind, but you can also go in here and see. some other press releases and information, they have articles written by some of their collaborative analysts about companies like Searching Alpha, where you can see that,so there are plenty of other places you can go to investigate. Another one I like to check is NASDAQ. the NASDAQ site and I can get all kinds of interesting information here. I can also let you know what the analysts think about the company, which analysts are making recommendations about the company and you can see the list of them here so you know.

I'm getting deeper and deeper into the company and learning a lot more, but one place that I think is so important that people often overlook is going to the company website, okay? And you can know that here you have our company. you can access investors and you can see things like press releases, news and events, financial reports, stock information, any other ESG, you know the commitments and you learn a lot about the company, you can access events and presentations, and you know you can download slideshows. Listen to webcasts so you can learn a ton about the company by going to their website and all these other research sites I've been showing you here, but before I do all that, I take advantage of all the horsepower that fast charts give me.

I review operating profits. I also look at things like Gap.earnings diluted earnings which include a large common convention. I don't like value stocks that use these earnings because they have a lot of unissued charges, so I like operating earnings that try to give us a better indication of how the business is performing, but for dividend growth stocks like this that have increased their dividend for 45 consecutive years, I'm really looking at the operating cash flow coverage, it's the dividend covered by operating cash flow and it clearly is, and then the free cash flow to equity. The company also covered this dividend through free cash flow and it is no surprise that the company has increased its dividend for 25 consecutive years, so I have excellent cash flow numbers.

Other metrics like ebitda, which is earnings before interest taxes, depreciation and amortization, are another form of cash. flow I call it a soft form but it also gives me another valuation benchmark and once again we are seeing this trade not at one of the all-time lows that we saw coming out of the Great Recession, but we are starting to get some margin. security in the stock when it comes to valuation relative to historical norms, it typically trades at a consistent price of around 13 and a half. You can buy it at a even price even at a blended price, 11.4 ebitda right now it seems. attractive there even as very similar, so we'll skip it and then of course price the sales.

This is again not the lowest sales price the stock has traded at, but it is trading on the low side at a combined price that sells for approximately. three and a half, about the lowest, was about two and a half, so what I'm telling you is that I think there is limited downside risk from this company, assuming these projections turn out to be correct. I went to another website here and I think it is very, very expected, I mean, very, very excellent in terms of providing it, and it is the knowledge about the fortune business and the knowledge about the fortune business gives me information really Interesting about the size of the medical device market alone.

One thing I'm looking for in these uncertain times is as much predictability in earnings and earnings growth and revenue and revenue growth and cash flow and cash flow growth as I can find, okay, so They talk about the key insights of the market here and say that you know that the medical devices market size was 488.98 million in 2021. It is expected to reach 495 billion in 2022 718.9 billion by 2029 for a rate compound annual growth of five and a half percent. Well, that to me is reasonably consistent with the forecasts, you know, the numbers that I'm seeing at Medtronic in the quick dashes, you know, three and one.

Between half and four percent is what they estimate is a long-term growth of about eight percent and we are seeing very similar results with some of the others that we analyze, so the company is expected to grow, it is one of the keys. The players talk about the fact that they know there were some problems with covid, but they talk about the North American medical devices market is going to grow very steadily and they also talk about the key drivers and key indicators of the market, and you can You know, get into that here, you can check and see where Medtronic is, which again is a very high quality company, whose products, you know, fit into these equations, so there's a lot of information here and you know they talk about the key companies you follow.

This is an infographic where you know that they repeat those numbers. I was talking about growth. They talk about customers' growing preference for wearable devices. Increased prevalence of chronic diseases, especially diabetes and heart disease. Etc. Do you know that cardiovascular devices are expected to become popular? You know that at a very high rate and that's one of you that knows Medtronic's sweet spots, so you know that they do about half of their business internationally in terms of cells, so they're a global company in the that can participate all over the world. I know it's really an interesting time to buy this company and one thing I always like to look at is the analyst scorecard because it really frustrates me when people say, "You know?

You don't know? We're relying too much on analyst estimates. analysts. I hope you can understand from this video." We see that that's not the case, we start by looking at analyst estimates because that gives us something to start with, it gives us a frame of reference that we can say, okay, these analysts seem to think this is a pretty good company, they have a excellent track record. In reality, it was only the coveted years that caused analysts to lose their two-year record. It's even better, so this company provides good guidance. It's relatively easy to forecast that the demographics are really in their favor, as I've already noted, so overall, I really like this company in the long run and of all the medical device manufacturers, I think the whole industry is interesting if you can buy them at attractive valuations, but no company teaches us better how important valuation is and it is very important, the company may be doing it fabulously. and as an investor, you may be losing money simply because you overpaid for the company, as you know you would have done with Medtronic if you had bought it in May 2022 and held it until 2011.

You really wouldn't. I haven't even started to break even on this stock until probably something like 2013, you know, and you would still have a very anemic rate of return including dividends, and you know the total rate of return is barely higher than that you can get. just from the dividend income so let's talk about past performance because again this company is undervalued right now or as you know on the lower end evaluation the real key is that its long term dividend history is really excellent, but with fast graphics you can shorten that time. Marco and I want you to realize that you have very high rates here in 2016 and 17.

So I'm going to take it out of there and even today the company is still increasing dividends by seven or eight percent and that is one of the best. records and remember they have done this for 45 consecutive years. I believe they have paid dividends for over 60 years. I'm not too sure if the company is based in Ireland. It is a high quality company. It is one of the rare opportunities to purchase this. with an attractive valuation, so I think it's worth doing more research and due diligence on what is one of the best things fast weed does so you know right away if you should waste your time doing more research exhaustive. or not anyway, this has been Chuck Carnival, co-founder of Fast Grass, the fundamentals analyzer software tool.

I hope you enjoyed the video, if that bell rang give me a like you know and of course join the channel our channel is growing. I want to thank you all for that, we have a lot of plans for fast scratch, there are some cool new features coming, so if you haven't subscribed to Fast scratch you might want to take a look at that too. I personally couldn't. I even think about investing in stocks without the perspective that quick charts give me. Thank you all for watching and we'll talk to you soon.