Despite headwinds from tariffs and other operating pressures, medical technology giant Medtronic (MDT) delivered a strong performance in its fiscal year 2025, which ended on 25 April 2025. Looking ahead to 2026, analysts argue the company has not yet reached its growth ceiling. For long-term investors, particularly those seeking reliable dividend income, the stock is seen as a potential buy at current levels.
The following three factors are cited as key drivers of Medtronic’s future potential.
Last year, Medtronic announced plans to spin off its diabetes care business into a separately listed company. According to the timeline provided by management, the transaction is expected to be completed by the end of this year. This strategic shift is considered significant for the medical technology leader.
In certain segments of the diabetes care market, Medtronic has fallen behind industry leaders, particularly in the development of high-end continuous glucose monitoring (CGM) systems. Even in insulin pumps, the company faces strong competition. Diabetes care is also Medtronic’s only consumer-facing business unit, and its operating margin is notably lower than that of the group’s other divisions.
In fiscal 2025, the diabetes business accounted for 8% of Medtronic’s revenue but contributed only 4% of operating profit. By divesting this unit, Medtronic is expected to sharpen its focus on its core business-to-business (B2B) operations, potentially unlocking more profitable growth opportunities.
Medtronic’s Hugo robotic-assisted surgery (RAS) system, designed for urological procedures, received regulatory approval in the United States last year. While the system is not expected to deliver a substantial boost to revenue over the next one to two years, it is seen as opening up a major long-term growth avenue for the company.
Penetration of the robotic-assisted surgery market remains relatively low, leaving considerable room for expansion. Robotic support for minimally invasive procedures offers meaningful advantages for surgeons, yet many eligible surgeries have not yet adopted robotic solutions. Entering this market represents an important step for Medtronic, even as it contends with intense competition from other large medical device manufacturers.
As shipments of the Hugo system increase and its approved indications expand, the platform is ultimately expected to make a material contribution to Medtronic’s financial performance.
For income-focused investors, Medtronic stands out as a high-quality dividend payer. The company has raised its dividend for 48 consecutive years and currently offers a forward dividend yield of around 3%. It is on track to join the ranks of “Dividend Kings” in the coming years, a designation reserved for companies that have increased their annual dividend for at least 50 straight years.
Moreover, Medtronic’s dividend growth is expected to continue even after it reaches this milestone. This track record and outlook are highlighted as another reason to consider buying the stock this year.
Taken together, a more focused business portfolio, the ramp-up of a new growth driver in robotic-assisted surgery and a long-standing commitment to shareholder returns position Medtronic for sustainable growth in 2026 and beyond.
