In Our 2024 Investment Strategy for Equities, we introduced our DIVOS™ strategy and during this week’s market turmoil, we initiated a very small position in MDT (Medtronic) and intend to hold and accumulate this stock for the foreseeable future.
Here’s how we think it fits our DIVOS model.
Demographics
Medtronic develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. In the United States and around the world we have a very rapidly aging society that will grow dependent on all sorts of medical devices to maintain a good quality of life. In the United States, there are an estimate 70 million people that will be retired by the year 2030 and we think many will be utilizing Medtronic goods and services over the next decade.
Income
Medtronic is a dividend aristocrat which is an equity that has been paying dividends for at least 25 years and we expect that trend to continue over time. Additionally, Medtronic has generated about $38k in net income per employee which is just shy of our 50k minimum threshold however we think it’s good enough for now.
Value
As of the time of this post, Medtronic is trading at about 1 percent over it’s 52 week low. We will slowly accumulate shares from here but we are keeping an eye on the market volatility and for bond rates to stabilize before we make any significant purchases in this stock.
Options
Medtronic has an options market and we look forward to selling cash secured PUTS and sell covered calls on this stock to squeeze more value and profits out of this equity. As of 4th of Oct 2023 the call option table below shows a potential yield of about 5% for a buy-write trade executed for January 2024 out-of-money trade today theoretically.
S&P 500
Medtronic is a member of the S&P 500 and currently fits our bias toward three industries moving forward: Healthcare, Technology & Consumer Discretionary. If you want to know why we favor these three industries, check out the S&P 500 Sector Performance chart.
We’ll let you know as we accumulate more, we’ve already set our MDT to DRIP (Dividend Re-investment Plan) so we’ll be acquiring shares automatically once we receive dividends but we’ll also buy more via cash secured puts and buy-write trades so stay tuned, stay profitable and stay solvent…