Medtronic Pays More Today. Abbott Raises Its Dividend Faster. Which Stock Wins?
Both are Dividend Kings with decades of consecutive raises, but Medtronic and Abbott reward income investors in fundamentally different ways, and choosing the wrong one in retirement could cost you more than you expect.
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Medtronic (NYSE:MDT | MDT Price Prediction) or Abbott Laboratories (NYSE:ABT): which medical device dividend stock better suits income needs in retirement? Both stocks outperformed competitors on a strong trading day Monday, but they pay income investors in very different ways. Medtronic offers the higher current payout and covers it with cleaner cash flow. Abbott raises its dividend faster. Medtronic’s higher, better-covered yield carries more weight when you live on the checks.
Yield: Medtronic Pays More Per Dollar Invested
Medtronic’s forward annual dividend of $2.88 yields 3.22% with the stock at $91.93. Abbott’s forward dividend of $2.52 yields 2.49% at $102.35. Medtronic also costs less: about 15x forward earnings versus 17x for Abbott, and 23x trailing earnings versus 34x.
Winner: Medtronic. More income up front, at a lower multiple.
Dividend Safety: Medtronic’s Coverage Holds Up Better
On trailing GAAP EPS of $4.07, Medtronic pays out about 70%. Abbott pays out roughly 82% of its $3.03. The $21 billion Exact Sciences acquisition is weighing on Abbott’s GAAP results: second-quarter GAAP EPS fell to $0.53 from $1.01, interest expense rose to $299M from $50M, and the company recorded a $385M legal reserve. On adjusted guidance the two look closer. Medtronic’s dividend is about 48% of its $5.94 to $6.00 fiscal 2027 guide’s low end, and Abbott’s is about 46% of its $5.45 to $5.60 range.
Free cash flow gives Medtronic the edge. Medtronic generated $5.43B of free cash flow in fiscal 2026, and first-quarter free cash flow of $1.29B covered $921 million in dividends, a payout of roughly 71%. Abbott’s cash flow commentary was limited to guidance that cash generation is “likely going to put us ahead of our January forecast for the year.”
The businesses behind the payouts carry different revenue mixes. Medtronic sells procedure hardware: pacemakers in a Cardiac Rhythm Management unit with more than $5.5 billion in annual revenue, ablation systems growing 88%, a surgical business above $6 billion, and spine robotics. Separating its lower-margin Diabetes unit should lift operating margin by about 100 basis points. Abbott spreads its revenue more widely: devices brought in $5.85B of $12.59B in quarterly revenue, with diagnostics (now including Cologuard), branded generics, and nutrition making up the rest. That diversity helps, but nutrition declined 3.1% and U.S. Structural Heart sales fell 9.8%.
Winner: Medtronic.
Dividend Growth: Abbott Compounds Faster
Abbott just made its 54th consecutive year of increases, and Medtronic its 49th, putting both firmly in Dividend King territory (we ranked ten Kings by valuation in a free report). Dividend records back to 1999 show annual raises for both, with one exception: Abbott’s quarterly payment fell from $0.51 to $0.14 in 2013, when it spun off AbbVie (NYSE:ABBV). Abbott counts its run as unbroken on a combined basis.
Abbott wins easily on pace. Its 2026 raise from $0.59 to $0.63 came to about 6.8%. Medtronic went from $0.71 to $0.72, about 1.4%. Since 2016, Abbott’s quarterly payment is up roughly 142%, compared with 67% for Medtronic.
Winner: Abbott.
Verdict: Medtronic Is the Retiree’s Dividend Stock
Medtronic wins for retirement-focused income investors. It wins two of the three areas, and those two matter most once you start drawing income: a higher starting yield and cash coverage you can actually see. Its small raises are the weak spot, but the business underlying is speeding up. Fiscal 2026 revenue rose 8.43%, and management raised its fiscal 2027 organic growth guide to 7.25% to 7.75%. With the margin lift from the Diabetes separation on top, Medtronic has room to raise faster.
Abbott suits investors with 15 or more years before retirement who reinvest their dividends. Its price return of 200.92% over ten years crushes Medtronic’s 45.41%, and a 21.01% drop over the past year leaves the stock below its old highs. For income you need now, though, Medtronic pays more and covers it better.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
